A Senate Committee has released its report into laws that make wage theft a crime. The key matter the Committee had to determine was the extent to which these laws have reduced the amount of “wage theft” in Australia.
However, the Committee didn’t determine this.
Instead, partisan politics significantly influenced the Senate inquiry as many of the conclusions and recommendations the Senators on the Committee made reflected their underlying political policies.
What’s the wage theft offence?
The Albanese Government made wage theft a federal crime on January 1 2025. It means that employers now commit an offence if they deliberately undercut their workers’ pay. That includes employers intentionally not paying an employee’s wages, leave entitlements and penalty rates.
If convicted, employers face significant criminal penalties, including imprisonment for up to 10 years and fines, potentially in the millions of dollars.
The aim of this criminal offence is to reduce wage theft by deterring unscrupulous employers from being tempted to underpay their workers.
What was the Senate inquiry?
The Senate Education and Employment References Committee conducted the inquiry. Chaired by Liberal Senator Maria Kovacic, the Committee consisted of two Labor Senators, three Liberals (including the Chair), a Greens Senator and Independent Senator for Western Australia, Fatima Payman, as a participating member.
It was Senator Payman who initially coined the idea of the Senate inquiry in March this year. The Labor Government opposed it, as another review was already underway that was assessing the wage theft offence. That review was conducted by Susan Booth, an independent expert in industrial relations.
However, Senator Payman still managed to secure the Senate inquiry following concerns raised by this Senator and business groups that the wage theft offence was not having an impact. They also questioned whether the $49.5 million of taxpayers’ money provided to the Fair Work Ombudsman (FWO) — Australia’s workplace watchdog — to fund its investigations into wage theft offending was value for money. There haven’t been any prosecutions and the FWO only has a few criminal investigations in progress.
The (impossible) task of the Senate inquiry
The extent to which this criminal offence may have reduced wage theft in Australia was always going to be tricky for the Senate Committee to determine.
Actually, it was impossible.
To work out the true impact of the wage theft offence, the Senate inquiry needed empirical data.
That means it needed accurate information on how much wage theft there was before the offence came into force and how much wage theft there is now to see if there’s been a decrease. External factors — factors other than the offence that could influence the amount of wage theft — would also need to be taken into account to determine if any “drop” in wage theft was because of the offence or something else (such as other non-criminal laws also aimed at reducing underpayments).
There was no such data before the Senate inquiry.
However, instead of the Senate Committee acknowledging that it was impossible to answer the key question before it, the Committee members went on to make observations and findings that reflected their underlying political policies.
This caused a significant division among the Liberal, Labor, Greens and Independent Senators on the Committee.
The Liberal Senators’ majority report
The three Liberal Senators supported the Senate Committee’s majority report.
The majority report stated that “[t]he committee is not convinced that the criminal [wage theft] offence is having the impact that it was anticipated to have on a small number of businesses who deliberately and persistently underpay their employees”. The majority report said the Committee was also “not convinced that the almost $50 million provided to the Fair Work Ombudsman to administer the criminal offence is an effective use of taxpayer dollars”.
Instead, the majority report pointed to “the complexity of the industrial relations system”, which it considered to be “the structural driver of most underpayment”, and recommended that our modern awards be made “clearer and easier to apply”.
It’s not surprising that the Liberal Senators expressed these views in the majority report. These observations are consistent with the views of employer and business groups on the issue of criminalising wage theft. These stakeholder groups have traditionally had the strong backing of the Liberal Party.
The dissenting reports of the Labor and Greens Senators
The Labor and Greens Senators on the Senate Committee wrote dissenting reports.
These Senators pointed to the ample evidence which reveals that wage theft (including underpayments generally, and not just those of a deliberate kind) is rife in Australia, affecting especially vulnerable workers. As Greens Senator, Barbara Pocock, argued in her dissenting report: “Evidence to this inquiry clearly showed that wage theft continues to be a widespread, systemic and entrenched problem in Australia. Wage theft is worth billions of dollars in the Australian economy. Stealing wages from workers, especially workers with low bargaining power, like young people, women, and migrants, causes serious harm, and it is the most powerless who are most affected by wage theft.”
The Labor and Greens Senators supported the criminalisation of wage theft. This aligns with the positions of their political parties. It’s also consistent with the submissions made to the Senate inquiry by various stakeholders dedicated to promoting labour rights, such as the unions and some of the community legal centres focused on representing workers.
Unlike other members on the Committee, the Labor Senators didn’t make any recommendations. Instead, backing the Labor Government’s original opposition to the Senate inquiry, these Senators concluded that assessment of the wage theft offence should be left to Booth’s independent review.
Payman’s additional thoughts
Senator Payman provided additional comments to the majority report. Several observations Payman made reinforce this Senator’s political stance that the utility of this criminal offence should be called into question, which is what led her to secure the Senate inquiry.
Payman wrote that the Senate inquiry hadn’t received any submission which “unequivocally” or “without qualification” stated that the offence had reduced the amount of wage theft.
Although correct, context is important. It simply wasn’t possible for the Senate Committee or the stakeholders to make such a claim as the necessary (empirical) data was lacking.
The Senator recommended that the Government consider whether some — or all — of the taxpayer funding the FWO is receiving to conduct its criminal investigations should be directed towards other (non-criminal) types of investigations into wage theft.
The effect of this recommendation is that the FWO would be unable to conduct effective criminal investigations. Without effective criminal investigations, the wage theft offence would be rendered meaningless.
What’s needed?
Future assessments of the wage theft offence are needed. It’s important to know how the offence is working in practice, if it’s having the impact intended, and whether the offence can be improved.
But assessments of the offence need to be conducted much more objectively than what the Senate Committee did in this case. They should not be influenced by partisan politics. These assessments also need to more thoroughly engage with the relevant evidence on wage theft, including engaging with any relevant empirical data that may become available in the future.
To achieve this, independent experts should be engaged to assess the wage theft offence — not politicians.
Irene Nikoloudakis is a PhD Candidate in Law at Adelaide University. Her research focuses on laws that criminalise wage theft.
