A series of wage theft scandals that this week culminated in criminal charges against Woolworths show Australia has a “huge problem” with worker underpayments, ACTU secretary Sally McManus says.

Woolworths was charged in Victoria over failure to pay out long service leave, in what was just its latest wage theft revelation.

But the supermarket cannot be threatened with criminal conviction at a federal level because no such laws exist, at least not yet.

Ms McManus says a looming crackdown that will criminalise wage theft  federally will put money back in the pockets of workers amid the cost-of-living crisis.

“This will mean more money in workers’ pay, money that is rightfully theirs and needed to cope with cost-of-living pressures,” Ms McManus said.

“Big business has been getting away with it because they can. It is very hard to recover stolen wages and the deterrents are too low. Both of these issues must be addressed to stop wage theft.”

ACTU boss Sally McManus. Photo: AAP

Woolworths, which over the past three years has admitted to more than $750 million in unpaid wages and entitlements, now faces its most serious consequences yet – the spectre of a criminal conviction – over just $1 million in long service leave.

But at a federal level such criminal laws are still sitting before Parliament where the Albanese government is attempting to turn back the dial on the former government killing such reforms back in 2019. 

The Albanese government is currently attempting to move a federal criminalisation of wage theft through Parliament after the former government spectacularly killed such reforms back in 2021.

The Fair Work Ombudsman (FWO), which enforces civil underpayment laws federally, revealed last week that it recovered $532 million dollars for shafted workers last financial year.

Corporates pursued

More than a billion dollars have been recovered in the past two years alone, and more than half of the identified underpayments came from large businesses like Woolworths or universities.

Woolworths admitted in February that it had still not repaid more than $270 million to its workers after subsequent investigations uncovered a much wider problem than first thought.

Optus, CommSec, Bankwest and the firm behind Rebel and Supercheap Auto are also facing prosecution either federally or in Victoria over wage theft.

Each faces millions of dollars in fines in addition to hefty repayment bills, but there are likely many more businesses who have underpaid their workers without facing legal consequences.

KPMG estimated in 2019 that workers in Australia were being underpaid $1.35 billion a year.

The federal reforms would do two main things – increase the scaling and maximum fines for underpayment federally and make wage theft a criminal offence under the Fair Work Act.

Business oppose reforms

But they face stiff opposition from business groups which have been trying to turn the screws on the government over wage theft in their campaign against Labor’s wider industrial agenda.

Despite the fact that the Coalition took a criminalisation of wage theft to the Senate during its time in office before dumping it, the Opposition is opposing the government’s industrial relations reforms.

The Australian Chamber of Commerce and Industry (ACCI) has warned against the reforms penalising non-deliberate underpayments, fearing criminal charges could hit businesses that inadvertently failed to pay their staff properly.

The position of regulators, meanwhile, has been that large businesses in particular shouldn’t be able to cite mistakes as an excuse, arguing that companies have adequate resources to get it right.

The acting Fair Work Ombudsman Kristen Hannah said this week that her office will use every resource at its disposal to go after businesses, even in cases where wage theft was accidental.

“The latest recoveries mean the Fair Work Ombudsman has seen more than $1 billion recovered for workers across Australia in the last two years alone,” she said this week.

“These results occur after the consistent work that our agency has done to create an environment that expects large corporates to prioritise compliance and to report to us when they have got it wrong.”