Debt in paradise

On the ground with wage theft

ANNIE TRIED TO leave. She had no cash, just a car full of possessions. She’d worked full-time for four weeks with not a cent to show for it.

‘Wait on, you owe us $60.’

She couldn’t believe it. ‘Uh, no I don’t.’

The manager showed her a computer printout.

‘You haven’t paid me for four weeks, how do you expect me to pay you?’

‘Well, we can’t let you leave.’

‘How are you going to do that?’

‘We’ll call the police and we’ll clamp your car.’

‘Are you serious?’

But she knew he was. He had clamped so many cars someone had told a local paper ‘hostels in North Korea are run better than here’.

‘Well, I don’t have any money that I can give you.’

So he made her sign a piece of paper that said Annie owed the Company $60.

It wasn’t what she’d expected, in this tropical haven. Debt in paradise. She had gone there, a month earlier, just to get away from things. It had always been a great place to visit.

She had got chatting to one of the managers. ‘Just kind of talking about what I was doing, and this and that.’ He offered her some work. She wasn’t really looking, but he had a job going for a sous chef. He had backpackers working there – for accommodation.

Annie was no backpacker. She was no naive young thing, either. She was thirty-four, a relative of mine. She wasn’t going to move, even to this tropical haven, to work for accommodation. But no, it’s all right, he said. You will be paid a wage.

She was over her current job. It wasn’t a bad offer. So, she thought, ‘Stuff it, I’ll go hang out up here for a little while and see what happens.’ She packed her house up and got rid of anything that wouldn’t fit in her car.

‘I moved up there, and when I got up there, they put me…in this dorm, and nine other staff members were there too. They’re like shipping containers, which was no bigger than to fit a double bed in there. I was like, “I kind of need another room, because I have all of my music gear with me.” I sorted that out, and then started work, and basically was told it was twenty-eight hours a week of work.’

But the set-up was that the first twenty-eight hours of work a week went on paying room and board. Any hours worked above that were ‘wages’. And she was not paid in cash, or bank transfers. Instead, her pay went on ‘the tab’.

So when Annie, fed up, went to leave, they gave her ‘the tab’. I saw a copy of it. In one night, it claimed, she had eaten a chicken schnitzel, a large seafood pizza, sausages, battered fish and five scotch fillet steaks (one rare, two medium, two medium-rare) – all within five minutes. The next morning, she had six big breakfasts and two ham toasties in three minutes, then bacon and eggs. Funny, but she put on no weight.

It was through this ruse that she miraculously owed the Company $60 instead of them owing her thousands of dollars in back pay.


IT IS NOT through bad luck that people like Annie run into employers like this. It’s what happens in this country. She was just another worker encountering a chronic problem in Australia. Unions call it ‘wage theft’: paying workers less than they are entitled under the law.

The only thing that made Annie slightly different was that she was an Anglo-Australian. While people from all walks of life can experience wage theft, migrants are most vulnerable. Whether they be backpackers on working holiday visas, international students, skilled workers on temporary visas or even permanent migrants, the risk of exploitation is greater, and there are so many ways it can occur.

People can be underpaid for regular hours, can miss out on penalty rates for night or weekend work, work unpaid hours, unpaid overtime, do unpaid trials or unpaid internships. They can miss out on entitlements such as superannuation. They can be illegally docked pay for alleged poor performance or breakages, unlawfully or unfairly dismissed, or sexually harassed. Breaks might be cut. People might experience mistreatment or excessive control or might be put in danger. Only some are caught in the statistics.

The businesses that want to steal pay from workers will focus on the most vulnerable, those who are most likely to be afraid, or tolerant or least likely to complain, such as workers with visas where the employer has the upper hand in making it not worthwhile – very not worthwhile – to complain.

Like backpackers. If you’re on a backpacker’s visa, you need to work eighty-eight days in your first year to be entitled to an extra year in Australia. Those days are certified by the employer. So, are you going to complain to an authority when your boss turns out to be dodgy?

The backpackers at the tropical haven where the Company operated weren’t going to. Many had already been ripped off in horticulture or elsewhere. They worked twenty-eight hours to sleep in the dorms. The Fair Work Ombudsman sent half-a-dozen staff around to inspect the Company while Annie was there, but that was before she had reached peak disillusion. It was her day off. She was having a coffee.

‘Act like a guest,’ the manager told her.

‘Nah. If they come ask me what’s going on, I’m going to tell them the truth.’

But they didn’t ask. And the other workers – all backpackers, bar one – were too afraid to talk, or disappeared to the beach, or acted like guests.

One was in tears. Annie told them, ‘They’re not here for you. They’re here for them. They can’t help you if you lie to them.’ It had no effect.

After the inspectors left, the boss held a meeting of around twenty staff. Annie recorded the meeting.


‘WHAT DID YOU do when you wanted some cash?’ I asked.

‘I rang Mum and Dad,’ she answered. ‘I didn’t have any income for nearly three or four weeks, and it got to a point where some money was coming out and nothing was going in. Mum and Dad helped me out for a bit.’

Annie’s experience gives us an insight into not only what is common – almost run of the mill – for temporary migrants, but how that can flow through to the experience of the rest of the workforce. If one group of workers can be paid well below the legal minimums, that opens opportunities for employers to apply pressure to other workers. ‘If you don’t take the job, I’ve got a dozen backpackers/students/migrants who’ll do it for even less.’ It’s often left unsaid.

The published data shows that many workers, especially in hospitality, miss out on penalty rates for working nights or weekends. Many are not even paid the proper base rates for ordinary hours of work.

Annie was not the sort of person to take it when a boss tried that on. But many people don’t have Annie’s resources. A lot worry about losing their jobs if they complain. Although some working in retail or hospitality are students, it’s often their only source of income and they depend on it. There are sole-parents. There are single-income earners working full-time. The median income of households with retail employees is below that of other households.

And then there are the most vulnerable workers. One study that interviewed twenty-one international students in Melbourne cafés and restaurants found all were in casual jobs, all were underpaid and some did work for which they weren’t paid at all. Ashleigh Mounser, a student at the University of Wollongong, compiled a list of sixty underpaying employers, mostly within two kilometres of the university. Many paid either $10 or $15 per hour, well below the legal minimum. Limited English might mean migrant workers don’t know their rights, or lack confidence to enforce them. Yet most temporary migrants know their rights. What they really lack is power. Visa conditions give employers heaps of it.


SOME BUSINESSES TREAT wage theft as legitimate business practice. In January 2014, Stephen Cartwright, chief executive of the NSW Business Chamber, was reported as saying that thousands of retailers and restaurants were paying workers in cash and striking illegal private agreements about conditions to avoid award-minimums. This attempt to argue for cutting award minimums was also an admission of illegal behaviour by his constituents.

The Fair Work Ombudsman – the body charged with enforcing laws on conditions and minimum pay – has generated plenty of evidence of ‘wage theft’. According to its studies, 26 per cent of retail businesses did not properly comply with awards, as was the case for 30 per cent of pubs, taverns and bars; 35 per cent of accommodation businesses; 58 per cent of restaurants, cafés and catering businesses; and 67 per cent in takeaway foods.

7-Eleven franchisees commonly hired male international students. In many cases the deal was to work twice the allowed hours, get half the award-pay, and the books will all look okay. The business model of the head firm made it almost inevitable that franchisees underpaid staff, or they would go bust. In this franchise alone, something like $150 million of workers’ entitlements were stolen. Then, when franchisees were forced to pay legal wages, some insisted employees give back part of their wages – perhaps by accompanying employees to an ATM.

Very few complaints to the Fair Work Ombudsman end up in court – usually, only the most serious. In 2015–16, three-quarters of those court cases involved visa holders. Yet Annie’s experience suggests that most temporary migrants who get ripped off don’t report it. So the chances of an employer getting penalised for wage theft are very low.

It remains a viable option for employers to underpay workers as part of their business model. Even when underpayment comes to the inspectorate’s attention, prosecutions are oddly rare. If an employer gets caught and commits to an ‘enforceable undertaking’ to give back pay to staff, that’s generally the end of the matter. Some firms making such commitments have been simultaneously underpaying other workers.

Victorian lawyer Robert Corr complains that even bosses who forge payment records to hoodwink the Fair Work Ombudsman escape criminal prosecution. Perhaps he was referring to a situation described by Annie: ‘They asked for more time because they had to submit all this paperwork, which they were doctoring up while Fair Work was there… [The business owner] was on the phone to the girl at reception to print out pay slips.’ It is a breach of the federal criminal code to knowingly provide false or misleading information or documents to government investigators. Corr is unaware of any criminal prosecution of any boss by the Fair Work Ombudsman since 2008.

After all the scandals at 7-Eleven, the worst that happened was that the company had to give back pay to the workers where underpayment was proven. And the company has taken charge of the back-pay process. Meanwhile, the owners of this franchise operation were not the target of a royal commission or prosecution. Instead, one bought a private jet the year the scandal broke, the other a mansion in Melbourne.

Many contemporary businesses shift risk downwards to smaller firms, contractors, suppliers and employees. The method varies between industries – it could be franchising or subcontracting or something else – but when exploitation occurs, this ‘not there’ capitalism enables the firm at the top to say, in effect, ‘Not us! We’re not there!’


ANNIE WAS A talented musician. Her instruments were guitars. She couldn’t fit them in her car when she left because other people left with her. The instruments were now, in effect, hostages. So she had to pay the $60 to retrieve her guitars (and her TV).

She is still waiting for her $60 back, plus the thousands in back pay.

The kind of problems Annie experienced have been the subject of seemingly endless news reports, interspersed with in-depth treatments by Four Corners, Fairfax and other outlets. Academic research has exposed the systematic nature of wage theft. Ministers and a Senate inquiry acknowledge problems. Yet exploitation continues, seemingly unabated. Why?

It wouldn’t be fair to say nothing has changed. Queensland introduced a licensing system for labour-hire firms in April. Victoria and South Australia will do likewise, with some differences at the margins. Perhaps one day pressure will be strong enough to create a national scheme.

For now, though, the best we get from the federal government is rhetoric. The resourcing of agencies tells you a lot about priorities, and the Fair Work Ombudsman’s resources are far too meagre. And within those limited priorities, the Ombudsman has even less motivation to pursue badly behaving employers because it is also charged with chasing unions who break special rules. A couple of years ago, when some journalists at Fairfax walked off the job over retrenchments, the Fair Work Ombudsman was onto them, investigating whether they had breached some aspect of industrial law.

It’s an odd use of the resources of a labour inspectorate, and is not what the organisation did before 2006. Then John Howard brought in WorkChoices. Labor changed the agency’s name, but the contradiction in its role remains.

Labor seems to say it will keep the Fair Work Ombudsman if it wins office. Actually, they should tear it down and start again. Its current responsibilities leave it hopelessly conflicted. More resources can’t solve the problem of a conflicted agency.

Eventually the Fair Work Ombudsman sent Annie a letter that ignored the issue of her underpayment and the illegal garnisheeing of her wages for meals she couldn’t have eaten. It suggested Annie pursue any outstanding matters herself through the small-claims court. For more information, it said, see this URL – which went to a ‘404’ error page.

Annie thought that she’d lose more in legal fees than what the claim was worth. Even though the small-claims court doesn’t require lawyers, there are documents to be served, affidavits to be prepared, hearings to attend. Just the sort of thing a disadvantaged worker would take on. The letter also talked about an ‘audit’ into whether the Company had misrepresented to employees that they were independent contractors. But that led nowhere.

Why? A let-out clause in the Fair Work Act allows the employer to ‘prove’ that they ‘did not know’ the contract was a contract of employment rather than a contract for services. So the Fair Work Ombudsman said it had ‘insufficient evidence to negate’ the employer’s defence of non-knowing. The Company got a ‘letter of caution’ and information about some online tools. It’s not what would happen to a worker if they stole some of the employer’s money.

Whether the problem is the wording of the law, the decisions of officials, a lack of resources or a lack of attention, the outcome is the same. In the end, it is all about the priorities of the government. And power.


ANNIE NOW WORKS in a kitchen in another town. Longer hours than she wants: ‘I’m doing seven days straight, having one day off.’ She asked them not to roster her like that again, but they keep doing it.

‘I’m just going to start calling in sick for a couple of days.’ Even if workers aren’t organised, they can still resist.

Every so often there are false dawns. Before the last election, the 7-Eleven scandal forced the government to announce ‘vulnerable workers’ legislation to protect franchise employees. But again there are let-out clauses. A contravention by a franchisor only occurs if they ‘knew or could reasonably be expected to have known’ that breaches were occurring.

This may be even an easier let-out clause than that which let the Company in paradise off the hook. The franchisor does not even have to prove they did not know, it’s up to someone else to prove they did know or could reasonably be expected to.

‘It’s not right and it’s not fair!’ says Annie.

Is this where our priorities lie? Is this who we are?

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