By Jacob Kairouz
There is no doubt that the Fair Work Commission’s decision on 23 February to cut penalty rates will cause hardship to students all over the country. However, there is a more pressing problem with our industrial relations model that is not receiving enough attention. Underpayment of award rates has become so commonplace in hospitality workplaces that ironically many of us will not be worse off under FWC’s latest decision. A lot of workers are already being paid less than the award rate, effectively less than the minimum wage, and never even received penalty rates in the first place.
As an experienced hospitality worker it is easy to find a job. However, as I discovered the last time I looked for work, it is far from easy to find a job where everyone is paid fairly and lawfully. I had six job interviews at different cafes around town earlier this year and none of them paid their staff the award rate. In one upsetting conversation a cafe owner said to me: ‘No single worker is worth $30-$40 per hour. It’s just ridiculous.’ Hesitantly, I had to agree that no one is worth $40 because the award wage is almost half of that sum. He continued, ‘I don’t pay penalty rates, I pay my staff a fair rate depending on their experience.’ But he never intended to pay me a ‘fair rate’. Most of these cafes offered me between $17 and $20 per hour as a casual worker. But I know what I am worth. The minimum hourly rate is currently $23.64 and $28.37 on weekends.
While university graduates might be in a position to negotiate a salary, hospitality workers certainly don’t have the same bargaining power. We are unskilled workers and employers will not usually be willing to fork out for someone more experienced. The Fair Work Act 2009 (Cth) was meant to protect workers from exactly this problem. The object of the act is stated at s 3 (c):
Ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system.
The Fair Work Act has definitely failed on this premise. Howard’s Australian Workplace Agreements are gone but illegal individual agreements are everywhere. The Ombudsman does not have the resources to actively investigate and enforce minimum wages. Because of this the market price for labour has dropped far below the award rate. We need only look at the controversy around 7/11 and Dominos to see just how easy it is for employers to steal straight from their employee’s pockets.
Unfortunately, wage fraud is even more common than the media has suggested and not at all limited to big franchises. A friend of mine worked at a reputable coffee roaster in South Melbourne and was underpaid more than $1600 over four months. All the staff there were being paid $20 per hour as a flat rate with no paid leave entitlements: $3 short of the minimum wage. Eventually she worked up the courage to confront the HR team and ask for the money. Luckily they admitted the mistake and back-paid in full but most people wouldn’t be so fortunate. I know of others who complained to their bosses and faced the sack soon after. Perhaps worse than this, many workers don’t even know when they’re being underpaid.
On paper, we have one of the fairest industrial relations systems in the world. On paper, there is no need for union involvement because the minimum safety net is already so generous. But this just doesn’t translate into reality. The Fair Work Ombudsman has failed to enforce minimum wages so we need to start doing it ourselves. As law students we have to use our negotiation skills and knowledge of the law to encourage vulnerable workers to stand up for equality. The only way to make a difference is for all of us to act together, reporting unlawful activity to the Fair Work Ombudsman or to the unions. Before we can campaign for better penalty rates we need to campaign to be paid the minimum wage.