What is Wage Theft?
Wage theft is an ongoing issue in society. Employers lining their pockets with employees wages is illegal. Our article breaks down the law on this issue.
Employees of all kinds can experience wage theft. To prevent yourself from becoming victim, it is important to understand what it is. Our article breaks down what it is, and how it can affect you.
What does ‘wage theft’ mean?
Wage theft refers to the under paying of employees, or the denial of employee benefits. Common examples include paying under the legal award rate, not paying overtime or superannuation, or classifying employees under the incorrect label.
What are the main types of wage theft?
Listed below, are the most common ways that employees conduct wage theft to their employees.
Refusal to pay as agreed
Employees often experience not receiving the correct pay as agreed with their employer. Consequently, employees may not receive the agreed wage, may not receive paycheques, or may not be paid for all hours worked.
Award rate violations
This is arguably the most common form of wage theft. Underpaying employees the legal award rate is an extremely common occurrence. Especially, teenagers and young adults who don’t understand their entitlements often fall victim to this. To determine your award rate, follow this link.
Not paying overtime
Overtime pay is commonly denied to employees. Whether this is full-time employees working more than 40-hours, or part-time employees who are asked to stay late, this is an epidemic in Australia. Furthermore, many employees are not paid overtime at the legal award rate.
How common is this?
In today’s society, many businesses purposefully conduct wage theft. Particularly prevalent among small businesses such as cafes, many employees are underpaid and refused benefits without realising. In 2016, the Fair Work Ombudsman published the following statistics;
- Accomodation / bars: of 750 audits, the Ombudsman recovered over $350,000 in lost wages for 629 employees.
- Restaurants / cafes: 58% of audited businesses conducted wage theft.
- Takeaway / fast-food: 67% of audited businesses conducted wage theft.
Why is this so common?
The current laws make it too easy for businesses to get away with wage theft. Furthermore, the punishments are too light. It is difficult for union officials to inspect wage books, and to know when employees are being denied benefits.
Several stores also threaten legal action for any person who attempts to report breaches of lack of payment. For example, 7/11 would threaten deportation to any of their underpaid international employees if they were reported. This makes it difficult for the Fair Work Ombudsman to know when wage theft is occurring, and to take appropriate action for it.
What to do if you’re underpaid
If you believe you’re underpaid and are still working for your employer, the following steps are recommended;
- Send an email to your employer of the award you’re covered under, and the appropriate legal rate you’re entitled to.
- If this fails, or you no longer work for your employer, it is recommended to obtain a letter from your solicitor requesting backpay.
Australian law allows employees to obtain backpay for up to 6-years previous. However, if these recommended methods fail, you should contact the Fair Work Ombudsman and report the employer.
Wage theft is a serious problem in Australian society. It is employers lining their own pockets with employees wages, as opposed to the fair earnings of the business. If you believe you are underpaid, an employment contract review lawyer may be able to assist your enquiries.
Kyle worked in the content team as a legal intern for Lawpath. He is undertaking a Bachelor of Laws with a Bachelor of Psychology (Honours) at Macquarie University.