The misleading and inaccurate use of the term wage theft

Article highlights that underpayment by employers to employees is not necessarily criminal wage theft.
Australia Employment and HR
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Wage theft is one of the flavours of the month in the industrial relations space at the moment with repeated calls to introduce tough criminal penalties for those employers who “steal” their employees’ wage by underpaying them.

There is no doubt that all employees should be paid what they are owed for a hard day’s work, after all, a “fair go all around” has long been a bedrock of Australian employment law. However, the words we use to describe the problem matter. The growing use of “wage theft” as a catch all term to describe all underpayments seems to be an attempt to recharacterize something which is often unintentional, as something that is malicious and deliberate.

Mandy Patinkin’s character in the classic movie The Princess Bride could well have been referring to “wage theft” when he said “You keep using that word. I do not think it means what you think it means”. In the campaign to criminalise “wage theft”, and the commentary surrounding it, the phrase has commonly been used as a catch all term by the unions, media and politicians to refer to any underpayment of employee entitlements, both intentional and mistaken. For example, the Queensland Council of Unions describes the term as ‘the underpayment or non-payment of wages or entitlements to a worker by an employer’. The Queensland Office of Industrial Relations defines the term to mean ‘when an employer fails to provide their employees with the full wage or salary to which they are entitled’.

However, this definition and use of the word is not consistent with the proposed laws criminalising “wage theft” in Queensland and Victoria, which requires deliberate underpayments. This is because for an act to be theft at a criminal level it requires mens rea (that is intention, or the “guilty mind”) on behalf of the perpetrator. In the employment context, “wage theft” therefore requires not just that an underpayment has occurred but that this was an intentional act by an employer. A genuine mistake in applying an industrial instrument, or well-intentioned employers applying the wrong industrial instrument, would not be criminal as there is not the required mens rea to do the wrong thing.

In addition to this, by using “wage theft” as a catch all term for intentional and unintentional underpayments, unions and politicians are largely creating the perception that all underpayments are the result of businesses deliberately exploiting workers, and that by criminalizing wage theft they are cracking down on all those who underpay their staff. However, the Fair Work Ombudsman has noted a number of times that the underpayment of employees is usually due to a lack of awareness or expertise regarding Australia’s complex industrial relations laws, rather than anything malicious or nefarious. In other words, the majority of underpayments do not meet the criminal threshold of “wage theft” because there is no intent from the employer.

All of this of course, does not excuse unintentional underpayments by employers. But in my view, there are better ways to ensure compliance with our industrial laws and instruments than by using inaccurate, emotive rhetoric to describe the problem. The issues with the concept of “wage theft” are not limited to the misleading use of terminology and in my next blog post, I will discuss the legal and practical problems with its proposed criminalisation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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