Four ways to stop restaurants like Rockpool ripping off workers
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Four ways to stop restaurants like Rockpool ripping off workers

A prestigious name. A celebrity frontman. An empire of establishments from fine dining to "casual and fun". But in the kitchens of some of Rockpool Dining Group's restaurants, a Fairfax investigation has found conditions were neither fine nor fun.

Allegations include skilled chefs earning as little as $15 an hour some weeks while working 30 hours unpaid overtime. Excessive hours leading to fatigue and injury. Staff schooled in how to falsify the hours they worked. Migrant workers with temporary visa status vulnerable to exploitation.

Neil Perry, the Rockpool Dining Group's chief brand and culinary director and a significant shareholder.

Neil Perry, the Rockpool Dining Group's chief brand and culinary director and a significant shareholder.Credit:Fairfax Media

The story is just the latest in a series of cases of apparently underpaid wages in businesses with household names: 7-Eleven, Caltex and Dominos.

The government’s immediate response? Decidedly inadequate, serving only to highlight the flaws in its overall strategy to address wage theft.

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While we can expect the Fair Work Ombudsman to give these high-profile cases its full attention,  wage theft is not isolated to big name businesses with brands to protect.

Research, including our own, shows that it is widespread and entrenched, particularly involving vulnerable temporary migrant workers in small businesses.

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The workplace minister, Craig Laundy, suggests that the ombudsman will resolve the issue because it is armed with new laws including fines increased tenfold and additional funding to enforce the penalties. At the same time, he accuses unions of breaking the economy and calls for employers to unite to fight against them.

But this approach will resolve little and deter few employers from underpaying legal minimum wages.

There is an alternative strategy for the minister to properly address the scourge of wage theft to benefit the economy, including small and family businesses.

First, significantly increase the ombudsman's resources. The new higher maximum fines apply only to employers "knowingly" and "systematically" underpaying. In practice, imposing these fines will require the ombudsman to catch employers committing multiple contraventions over a long period.

Munich Brauhaus at South Wharf, Melbourne, one of the Rockpool Dining Group's casual dining restaurants.

Munich Brauhaus at South Wharf, Melbourne, one of the Rockpool Dining Group's casual dining restaurants.

But the ombudsman was never established and resourced to perform this role on its own. It has about 185 inspectors, in addition to a team of officers involved in alternative dispute resolution, to police millions of workplaces across the nation.

The government has often claimed that it increased the ombudsman’s funding by $20 million. Such a modest revenue increase, announced in 2016, won’t solve the current crisis of businesses failing to comply with employment law.

In each of the six years prior to that announcement Labor and Coalition governments cut the ombudsman’s "revenue from government" from $144.6 million to $108 million. Minor increases in the following two years totalling $9 million are positive but it remains difficult to see the $20 million increase.

In a perverse twist, the last two years’ revenue increases are shared by the ombudsman and the Registered Organisations Commission. Combined revenue of the ombudsman, responsible for policing minimum wage compliance, and the ROC, responsible for policing union activities, is now less than the ombudsman’s alone just five years ago.

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Second, instead of demonising unions, make them part of the solution. Australia used to have an effective minimum wage enforcement regime, relying on joint regulation by unions and the state, in the context of permanent migration. High membership coverage and relatively free right to enter workplaces gave unions knowledge of employer non-compliance and opportunity to address it. Employers were deterred from underpaying wages given the high risk of detection.

Unions now have little role as enforcers. They have virtually zero presence in workplaces in low-wage industries given their diminished membership. Having lost their formal role as joint regulators they also have limited rights to enter workplaces. Restoring some of these rights and empowering workers to speak up could significantly address the widespread problem of underpayment.

Third: fix our flawed immigration policies that explicitly disadvantage temporary migrants and make them a focus for predatory behaviour.

Temporary migrant workers, whose number has increased dramatically over the past 20 years, are particularly vulnerable to unscrupulous employers, and less likely to approach government agencies directly. This is particularly so for those on visas that create dependence on employers, such as Temporary Skill Shortage visa holders (formerly 457) working in restaurant kitchens and working holiday makers working on farms.

Protestors pin signs to the windows of a 7-Eleven store to protest about the company's worker exploitation and wage fraud scandal.

Protestors pin signs to the windows of a 7-Eleven store to protest about the company's worker exploitation and wage fraud scandal. Credit:Paul Jeffers

Removing institutionalised dependency inherent in temporary visas, as recommended in the Joint Standing Committee on Foreign Affairs, Defence and Trade’s recent report on modern slavery, would be a good start.

And, finally, the government should enlist support from compliant businesses and industry associations. Surely the Restaurant and Catering Association, the Australian Retailers Association and ACCI have members complying with employment laws and suffering competitive disadvantage against underpaying employers. The minister should be insisting that these businesses and their representatives be more involved in calling out dodgy practices in their industries.

It must be a priority to support small and family businesses by delivering a level playing field, devoid of anti-competitive undercutting of wage costs.

The time has come for the government to deliver more than assertions that theoretically large fines and modest funding for the ombudsman will solve the wage theft crisis.

Dr Stephen Clibborn and Dr Chris F Wright are from the University of Sydney Business School. This article is based on their article in the current issue of Economic and Labour Relations Review: Employer theft of temporary migrant workers' wages in Australia: Why has the state failed to act?