Why are we so soft on wage theft?

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George Calombaris, chef, restaurateur and recently departed MasterChef judge, has emerged as the poster boy for wage theft in the hospitality industry after it was revealed in July that his business, MAdE Establishment group, underpaid more than 500 former and current staff $7.8 million.

George Calombaris at the 58th Annual Logie Awards at Crown Palladium in Melbourne on 8 May 2016. Credit: Scott Barbour / GettyCalombaris is not the only employer to be caught out. A Fairfax investigation revealed that the Rockpool Dining Group, a private equity-owned restaurant empire fronted by celebrity chef Neil Perry, underpaid its staff $1.6 million in the 2017-18 financial year. Bistro Guillaume at Crown Melbourne, Vue Group and Teage Ezard-owned eateries Ezard and Gingerboy have also been accused of underpayment. Several fast-food franchises have also been embroiled in underpayment scandals, including Muffin Break, Domino's Pizza, and Retail Food Group, the parent company of Donut King and Crust Pizza.

While it might be making headlines, this isn't news to me. In the decade I spent working in hospitality, my employers very rarely paid me anything approximating the award wage. I was once offered $7 an hour for a ten-hour split shift by a Wollongong restaurant owner — but only after I'd completed a three-month training period paid at $5 an hour.

Adam Liaw, a cook, writer and television presenter who became a household name when he won MasterChef Australia in 2010, told of a similar experience when he appeared on Q&A recently. Liaw acknowledged the widespread nature of underpayment in the hospitality industry, which he attributed to the complexity of the award system.

However, in my experience, underpayment was simply part of the business model. If you asked for a higher rate for weekend shifts, you'd likely find your hours cut — the mentality was take it or leave it. There was always another uni student ready to take your place if you spoke out.

Many employers accused of wage theft use the defence that it was 'accidental' — but it's difficult to argue underpayment was unintentional when, as in the case of Rockpool Dining Group, emails show that management instructed employees to log incorrect hours. At Bistro Guillaume, staff often worked 70 hours a week but were paid for just 38 hours. This type of underpayment is clearly not a simple back-office error.

'This is an industry-wide problem and it needs an industry-wide response,' said Natalie James, former Fair Work ombudsman, when a one-off blitz in 2018 by Fair Work in Brisbane, Melbourne and Sydney revealed an underpayment bill of $472,000.

 

"We're much less tolerant when it is staff stealing from employers."

 

It's no coincidence that many of these workers are from overseas: international students and temporary visa holders who are more vulnerable to exploitation than Australian-born staff. In 2018, I spoke to Alejandro, a UTS student from Chile who was paid $18 an hour at a restaurant in Enmore, for a story published at SBS Voices. He told me he'd often finish work at 1am but his boss, who was also verbally abusive, refused to pay him for hours worked outside of the rostered 6pm to 11pm shift.

A UNSW report published in 2017, Wage Theft in Australia: Findings of the National Temporary Migrant Work Survey, found that 43 per cent of international students surveyed earned $15 an hour or less. The study's authors found that two in five participants reported that their lowest paid job was in food services as waiters, kitchen hands or food servers.

'Wage theft seems to have become accepted as a fact of life, maybe even a necessity, in certain sectors and workplaces,' write UTS academics Sarah Kaine and Emmanuel Josserand in The Conversation. 'As a result, employers have developed a sense of impunity, while workers have become resigned to underpayment as unavoidable. Cultural acceptance translates into weak enforcement rules. Wage theft is not considered a criminal offence, in the same way as stealing money from a company.'

It's true that we're much less tolerant when it is staff stealing from employers. In one recent case, a judge handed a six-year jail sentence to a Perth woman who took $1.2 million from her employer over seven years. In another case, a Brisbane woman was sentenced to five years in prison for stealing $340,000 from her employers. In this context, is a $200,000 fine (or 'contrition fee'), like the one levelled at Calombaris, reasonable punishment for an $8 million theft?

Yes, hospitality has small margins, but it isn't the workers who should have to shoulder the financial burden on behalf of business owners. In our society, obeying the law is not optional. There aren't many crimes where the perpetrators can plead 'I didn't mean it' and get away with it, which is why business owners should face stiff penalties for underpaying workers.

 

 

Nicola HeathNicola Heath is a freelance journalist who writes about the workplace, social affairs, sustainability, and the arts and entertainment. She tweets at @nicoheath.

Main image: George Calombaris at the 58th Annual Logie Awards at Crown Palladium in Melbourne on 8 May 2016. Credit: Scott Barbour / Getty

Topic tags: Nicola Heath, wage theft, George Calombaris

 

 

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Existing comments

The only TV chef I watch is Matthew Evans, the gourmet farmer, in rustic Tasmania. If he turned out not to be an environmentalist who enriches the soil and travels around in an old caravan I would be very disheartened/disillusioned. I trust SBS to check on these things.
Pam | 05 August 2019


The author left out tax theft by most workers in the catering industry who refuse to work unless a significant portion of their wage is in cash.
Barry | 06 August 2019


The most important reason why employers are able to exploit their workers in the hospitality industry in my opinion is the fact that the workers are not in a union. Once workers become organised and elect competent leaders these practices are eliminated. Hopefully the men and women in this industry will see the value of a union and get themselves organised.
Kevin Vaughan | 06 August 2019


Just to Barry who alleges workers avoid paying tax by asking for cash payments. They still pay 10 tax. Its called gst. And with annual income low .. likely many would be below the tax threshold so 0% income tax.
mike brisco | 06 August 2019


I have often wondered why wage theft by employers - which appears to be rife in our economy - is not punished as severely as are employees who steal from their employers. It should be. And we need more honest officials policing companies' adherence to our industrial laws. For business owners to steal from some of our most vulnerable workers - and then get a slap on the wrist - is both unjust and deplorable.
Margaret Neith | 06 August 2019


Aren't we looking at this issue of "underpayment" the wrong way? If people are systemically working under the award, perhaps the designated "award" is the problem. Of course, if an employer contracts to pay X the award, or any other wage, and fails to do so, then it's theft. But what about employers and employees who are happy to contract a wage under the award, as seems to happen on a regular basis? Who says that $15 an hour is infallibly inscribed somewhere as the minimum level that someone can work for and be justly recompensed? The reality is that there are lots of employees who, for various reasons, find wages under the legal award beneficial to them, and there are lots of employers ready to take them on at a sub-award rate. When the award is enforced, the employers find they would be taking on these employees at a loss, or at least at a rate that’s not acceptable to them, and so have to let the employee go, even though both employer and employee would have agreed to continue their agreement at the sub-award rate. And so the employee enters the unemployment list and is paid out of our income tax ... the most blatant form of "wage theft" there is.
HH | 06 August 2019


This is just the unfettered free market at work. No unions to worry the bosses, no job security if workers complain and no interest from the regulators unless the scraps hit the publicity fan. It's "take it or leave it". Some will be hoping this business model catches on more generally. Barry, while I don't take your point about "most workers" refusing to work, maybe a cash wage is the only way to make ends meet on such low rates.
Brett | 06 August 2019


Nicola, An instructive article. Goes to show you what happens when neo liberal governments try to destroy the union movement in the name of 'free enterprise' or market forces determining workers wages. The rich grow richer at the workers' expense. The examples you quote; where ordinary workers get sent to goal for stealing from their employers, while employers who steal from their workers, get a slap on the wrist are sickening examples of a failure in our justice system. Barry, I find your remark about the exploited workers "cheating the ATO disengenerious to say the least! Like "Newstart", could you live on the wages these people are supposed to subsist on? The rich and powerful are worse offenders by a long stretch than these low paid workers. Please give them a break!
Gavin A. O'Brien | 06 August 2019


Probably always thus. Reminds me of the Enclosures Acts in 1600s and on in England, and the protest slogan/poem of the Goose and the Common.
Richard | 06 August 2019


There may be an expression of contriteness and repaying the money owed to those who have been underpaid. But how will this be done when many of those underpaid employees no longer work for the firms that under paid them because these underpaid employees are not aware or as backpackers have left the country?
nick | 06 August 2019


Theft is theft: whoever does it. Theft by employers, on the massive scale you mention, is despicable, and, if proven by normal legal standards, which should always be applicable, should result in severe penalties, not the 'slap on the wrist' which often seems to obtain. However good the legislation, it needs to be observed. Human nature being what it is...
Edward Fido | 06 August 2019


Brett and Richard are right. There is always a different interpretation of rules for the 'haves' than for the 'have nots'. The enclosure of the commons and the repudiation of the traditional rights of the agricultural worker was outright theft. Yet the Law that facilitated enclosure for the landowners also facilitated transportation for petty theft by the working class. The grand irony is that it also sanctioned the theft of land from indigenous peoples to establish a place where it could send minor so-called 'thieves'. HH's proposition is a recipe for the jungle where the strong will prevail over the weak.
Ginger Meggs | 07 August 2019


Whichever way you slice and dice your pertinent examples, GM, it's the state facilitating the injustice. Just as it is in Hong Kong right now. And, no doubt, in Epstein's cell - either out of monstrous incompetence, or brutal intent. Anyone who thinks that state power stops the "jungle", rather than being a magnet for the greedy and corrupt, is kidding themselves.
HH | 13 August 2019


Of course, HH, the state is often used to facilitate injustice. But then the 'state' is just a tool used by those who control the state, to legitimise the injustice, as in the examples I cited. In the examples you cite, the powerful don't need the state to inflict injustice, and that's why I described it as the jungle. We need the state to protect us, our rights, our environment, and our property. The issue then is about who controls the state and how abuse of that control can be managed.
Ginger Meggs | 19 August 2019


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