Widely distributed underpayment of migrant workers in Australia is now well documented. The overwhelming majority never recuperate the remuneration due to them.
In 2009, the federal small claims court process was introduced in the Federal District and Family Court of Australia. The idea was to make it easy and accessible for workers forum pursue unpaid wages and advantages from their employers – without the need for a lawyer.
But our recent thing tests found that in fact this process is virtually impossible to perform without legal support.
The Fair Work Act goals to ensure “a guaranteed safety net that is equitable, relevant and feasible“minimal rights and powers. But without widespread government enforcement or an accessible wage claims process, this is the dream of many migrants and other vulnerable workers in Australia.
Reforms are urgently needed to make small claims procedures work higher for everybody.
Fighting underpayments is just too difficult
Based on data from the Grattan Institute test published last yr, we estimate that between 490,000 and 1.26 million workers in Australia were paid lower than the minimum wage in 2018.
Importantly, this figure doesn’t include the many additional workers paid above the basic minimum wage but below their full entitlements, who would even have significant claims for unpaid wages.
There is no official data on the actions taken by these workers. But our separate ones 2016 study revealed that of the greater than 2,200 migrant workers who knew they were underpaid, nine in ten took no motion.
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For these people, the perceived risks and costs of taking motion far outweighed the slim probability of success.
Latest data confirms the very small variety of employees using these processes. In 2022-2023, only 137 people across Australia made claims under the federal small claims process.
Through its compliance activities, the Fair Work Ombudsman recovered just over $150,000 for individuals who identified as migrant workers in 2022-2023 – a small portion of the $509 million in total recoveries for underpaid workers this yr.
Why is it so difficult to use the small claims process?
To illustrate this, let’s use a fictional example. An international student from Colombia works nights cleansing a neighborhood food market and is paid a flat rate of $16 per hour ( national minimum wage is currently $24.10 per hour).
After many months, he finds a better-paid job and realizes that he earns too little. She asks her employer to repay all her debts – she believes it could possibly be greater than $15,000. He laughs at this request. He is subsequently considering trying to recover his wages through small claims proceedings.
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First, she must submit an application to the court, which incorporates providing the employer’s official company name (she only knows the name of the store and has never received a contract or payslips).
He must then rigorously calculate his outstanding entitlements. This means rigorously specifying her job category and applicable pay rates under a contemporary award or enterprise agreement (she has never heard of them).
He then must make complex spreadsheet calculations for every hour worked, bearing in mind additional time and different pay rates for evenings, weekends and holidays.
If you successfully submit your application, you could then formally serve the employer’s documents, appear in court and participate in the online hearing, meeting its various technical requirements.
The challenges don’t end there. An employer may disappear or refuse to pay even after the worker wins in court. The worker’s only option in such a situation is to initiate enforcement proceedings – this is practically impossible without legal assistance.
And if the employer is unable to pay, temporary visa holders are left without security because they’re ineligible Guarantee of fair rights.
Currently, the free legal aid programs offered are largely limited due to underfunding. And if employees use private attorneys to recover wages, a good portion of the amount recovered will go toward legal costs.
What needs to be modified?
If unfair employers know that migrant and other vulnerable workers are too afraid to report exploitation, they may proceed to systematically underpay them.
Our report – All work, no pay –sets out an motion plan for urgently needed changes.
First, the government should expand free and low-cost legal services that migrant workers need to pursue their claims. This should include:
- recent free salary and pension calculation service
- shifting costs in order that an worker who makes a successful claim can recover legal fees from the employer
- increased funding for local legal services and a brand new duty solicitor service to assist self-represented litigants on the day of hearing.
Secondly, court processes need to be simplified and made more flexible. This may include:
- making a recent jurisdiction to hear wage claims under the Fair Work Commission, a more user-friendly forum that might avoid the vital court formalities
- making the current small claims process more accessible – for instance by simplifying application forms and handling rules and providing stronger case management support.
Dave Hunt/AAP
Third, workers should be guaranteed wages after obtaining a court order against their employer. This would mean:
- the creation of a brand new government guarantee program to pay employees wages at their discretion if an employer disappears or refuses to pay
- extending the Fair Entitlement Guarantee to all workers in Australia, no matter immigration status.
A historic opportunity for change
The government’s review of the small claims process is in currently in progress.
In July, the government will pilot recent visa protections that may enable migrant workers to safely pursue wage claims without jeopardizing their visa.
The Government must proceed to seize this historic opportunity and conduct a review to be sure that migrant workers who now want to break their silence have a process available to implement their rights and hold abusive employers accountable.