Thousands underpaid in Aussie wage scandals

Victims were mainly low-wage staff employed by some of country's biggest companies

Thousands of workers, many of them migrants, have been underpaid in Australia by some of the country's biggest companies in a series of scandals that has led to a push for an overhaul of national workplace laws. 

The main culprits, according to media reports and government inquiries, have been employers of low-wage workers, including 7-Eleven stores, which underpaid an estimated 2,000 current and former workers by as much as A$100 million (S$103 million). Some were reportedly paid as little as A$5 an hour, less than a third of the current minimum wage of A$17.70 an hour.

Other companies accused by workers and the Fair Work Ombudsman of large-scale underpayments include supermarket giants Coles and Woolworths and fast-food eateries KFC and Hungry Jack's. 

Coles was found by the Fair Work Commission - the government's workplace umpire - in May to have underpaid workers under a deal reached with unions which led to underpayments of an estimated A$70 million a year. Other companies, according to media reports and investigations by the Fair Work Ombudsman, used subcontractors which underpaid workers or made deals with a union which resulted in workers being underpaid more than A$300 million a year. 

Many of the exploited workers were international students, migrant workers and casual staff who were not paid proper penalty rates for working overtime or on holidays. Some did not receive the additional pay they were supposed to receive in lieu of other rights such as holidays and sick pay.

The scandals have emerged from media investigations and rulings and inquiries by the Fair Work Commission and Fair Work Ombudsman with alarming regularity over the past 12 months, putting pressure on the federal government to bolster the powers of the Commission.

An expert on workforce relations, Associate Professor Stuart Rosewarne, from Sydney University, said the problems often involved large franchise companies in which individual outlets faced heavy cost pressures. In many of the cases involving franchises, he said, outlets were operated by members of ethnic communities who had exploited vulnerable members of their community.

"The  margins are so low for franchisees and they have to pay a return to their franchisors," he told The Straits Times. "There is also an ethnic dimension. The franchisees have generally been of Chinese and South Asian backgrounds."

The Fair Work Ombudsman, Ms Natalie James, on Monday announced that she would contact Korean employers, business groups and the consul-general to seek their help in ending the underpaying of staff. This followed a similar effort in January to address the Chinese business community.

"While I understand there are cultural challenges and vastly different laws in other parts of the world, it is important for business people operating here to understand and apply Australian laws," Ms James said in a statement.

Last year, the owner of a Korean restaurant in Sydney told regulators that he paid workers A$11-A$13 an hour because of pressure from competitors.  He claimed that other businesses would make false claims about hygiene problems if he did not pay the lower amount.

In a separate case, a South Korean national was forced to repay A$40,000 in underpaid wages to three South Korean backpackers who worked for his cleaning business.

The scandal involving 7-Eleven emerged last year after investigations by Fairfax Media and the ABC's Four Corners programme. 7-Eleven has paid back some A$26 million to 680 workers, according to the Fair Work Ombudsman, but faces further claims.

The federal government promised before the election on July 2 to clamp down on worker exploitation. An additional A$20 million is due to be allocated to the Ombudsman.

A version of this article appeared in the print edition of The Straits Times on September 21, 2016, with the headline 'Thousands underpaid in Aussie wage scandals'. Print Edition | Subscribe