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Wage Theft, by Liyan Gao

Transgressing and reforming the law: strengthening workers’ rights through political action

It might be illegal industrial action according to our current laws, and our current laws are wrong… It shouldn’t be so hard for workers in our country to be able to take industrial action when they need to…I believe in the rule of law when the law is fair and the law is right…But when it’s unjust I don’t think there’s a problem with breaking it.

Sally McManus, President, Australian Council of Trade Unions

Many have spoken about the inadequacy of legal rights bestowed by the law, how, while on paper we are presented with a simple story of equality and a set of rules that ensures justice, such justice is often obscured, obstructed or completely absent. One of the places this is most apparent is in the failure of the law to protect the rights of workers. The law legislates minimum wages and conditions, yet there is no real enforcement to ensure that the law is met: for example, that employees are paid an appropriate wage and are in receipt of their entitlements. The consequences have been clear in recent examples of wage theft from workers in industries with some of the most precarious working conditions: 7-Eleven workers, school cleaners, temporary migrant workers (including those completing farm work for a second working-holiday visa) and hospitality workers. Wage theft is rife in Australia. A recent study by Kronos shows that 10 per cent of Australian workers, or 1 million people, have rarely, or never, received the minimum wage; that 11 per cent are not paid for all the hours they work; and that 43 per cent have, at some point, been paid less than the minimum wage. Further, 76 per cent of workers in hospitality are paid under the minimum wage, according to a study conducted by the union United Voice. Importantly, an audit conducted by Unions NSW showed that 78 per cent of jobs advertised in Korean, Chinese or Spanish were below the minimum award wage. On average the wage advertised was $14.05, which, according to the audit on average award wages, is $5.28 below the minimum.

The flagrant openness—the normalisation—and severity of wage theft in Australia constitute a systemic failure of the law. While workers in certain industries are more vulnerable to wage theft, the audit shows that certain groups are more likely to be victims, in particular people from non-English-speaking backgrounds, young people and those living in Australia on a temporary basis. Advertisements referred to in the Unions NSW audit, which were in languages other than English, appeared in online sources offering travel advice, and targeted people likely to know little about Australian employment standards or rights, or how they might be enforced. This was affirmed by an audit conducted by the Fair Work Ombudsman in March in western Sydney, an area with a high migrant population, which found that 64 per cent of workplaces were breaking current workplace laws.

Issues relating to law and justice will always be highly problematic, for myriad reasons. They are intertwined with questions of power and the power imbalances among who makes the law, who has the resources enabling individuals to make use of the law, and for whom it is worthwhile to break the law. The Australian legal system was founded on an original injustice. The genocide of Indigenous peoples was a violence that has all too often continued to be reproduced in the legal system, as the treatment of Dylan Voller at Don Dale detention centre reminds us. Australian law and principles of justice were separated at the nation’s inception, and have sometimes been in opposition. In this context, it is unsurprising that there are severe limits to the law as an avenue for redressing injustice.

Rampant wage theft is the result of a failure to uphold the law. Currently, reputable restaurants can commit wage theft of millions of dollars without serious repercussions. George Calombaris owed his staff $2.6 million in unpaid overtime in 2017, but, while he was forced to pay the wages owed, there were no additional penalties. A person shoplifting grocery items could face harsher criminal charges. Simply put, the laws that are enforced are those that protect private property, not workers’ rights. As reported on The Conversation, the financial penalties that do exist are limited. Employers face a civil penalty of up to $10,080 for each breach and a corporation faces up to $54,000, but there are no criminal penalties for wage theft, and few inspectors to ensure that proper wages are paid.

For criminologist Marie Segrave, one of the problems facing enforcement is the lack of overlap between the Fair Work Ombudsman and the criminal-law system, even in extreme cases of exploitation. She asks why 7-Eleven is not being investigated by the Australia Federal Police given that some of the working conditions for staff could fall under the criminal code relating to slavery and slavery-like practices and human trafficking. These include the confiscation of passports, staff being forced to work under conditions that breach visa requirements and workers living in accommodation controlled by employers.

Social and cultural factors often exacerbate workers’ susceptibility to exploitation. Because of the lack of inspectors (240 Fair Work Ombudsman inspectors cover over 12 million workers across Australia) the system is dependent on workers reporting illegal practices. Often the most exploited and vulnerable workers have the least power and means to do so. Unions NSW’s audit found that temporary migrant workers are the most vulnerable to underpayment, due to a combination of a failure to understand their rights and fear of the consequences for their visa or residency status.

The Fair Work Commission (FWC) is a government tribunal whose key aim is to set and enforce a minimum wage. Each industry has a different award that stipulates wages and conditions. While FWC has in a number of cases been successful in returning stolen wages, it does not exist to protect workers’ rights but rather to mediate conflict between employers and employees. With its limited means of inspection and law enforcement, it is dependent on often-vulnerable workers to make complaints. It has no current measures that prevent companies from exploiting legal loopholes, nor, importantly, phoenix activity, which is when companies declare bankruptcy and transfer their assets to a new company structure—leaving workers without their entitlements—before any FWC investigation is concluded. As its powers are limited, one of the FWC’s key means of resolution is using a non-compliant mediation process. Louise Thornthwaite, past president of the Association of Industrial Relations of Australia and New Zealand, summarises:

…existing enforcement mechanisms are severely limited. Bodies such as the Fair Work Ombudsman are woefully under-resourced, have limited power to compel employer cooperation with inquiries, and face the prospect of phoenix activity, with employers liquidating when an inquiry starts, and then starting up again under a new name. For workers, the road to justice is limited by the time it takes, often shoddy employment records and, for migrants, the vulnerability to deportation.

The case of the missing wages at Campbell’s Soup, Shepparton

At the Campbell’s Soup factory in Lemnos, Shepparton, security is contracted out to the company Quad Services. Contracting out is common practice by both private business and government. Wilson Security guards can be found at your local Coles and also on the steps of Parliament House, Victoria. The privatisation of government services through contracting out results in decent-paying jobs being sold off to the cheapest contractors. The reason for using contractors instead of in-house staff is the usual free-market reasoning of ‘efficiency’. As is typical of such justifications, there is no evidence that this is true, but what is evident is that contracting out opens workers to gross exploitation. The outsourcing of work means the outsourcing of responsibility, including that of paying workers their correct wage. Small, often dubious companies can take illegal cost-cutting measures to reduce workers’ wages while the client or parent company that makes use of their services is distanced from such illegal and exploitative practices. Efficiency is a euphemism for cheap and vulnerable staff.

At Campbell’s Soup, there is another layer of outsourcing: subcontracting. Subcontracting—when contracts are sold on to another, generally smaller company—is technically not a bad thing, nor is it illegal so long as the subcontractors pay decent wages and offer good conditions. However, in many instances and in particular in industries such as security, subcontracting is almost synonymous with poor, casual employment, illegal wages and poor conditions. Another legal loophole that can be used in subcontracting is the incorrect use of business numbers (ABNs), which allows contractors to underpay staff and deprive them of entitlements such as superannuation and leave. With some contractors it is a condition of workers gaining employment that they obtain an ABN, so they can be falsely treated as a sole proprietor or small business instead of an employee (employment must meet certain criteria to be classified under the sole-proprietor payment scheme). Workers in these circumstances consequently lose entitlements. The chain of responsibility as compromised by subcontracting adversely affects traditional means of accountability, as the four guards at Campbell’s Soup learnt when they fought for their missing wages.

From February 2015 to October 2016 the four guards were collectively underpaid $86,456, some guards up to $30,000 each. When the guards first turned to their union for support, the subcontracted company undertook a phoenix action, applying for bankruptcy. What happened to the company’s assets is not clear, but legally there was nothing stopping it from transferring its assets to another entity (for example, to a partner or family member) and for business to continue as usual. At this point the union took an underpayment case to the Fair Work Ombudsman, which offered a meagre twelve weeks’ of the eighteen months’ lost pay through the Fair Entitlement scheme set up to deal with bankruptcies and liquidations. After this disappointing outcome from the ombudsman, the union launched a campaign against Quad Services, the subcontractor concerned, and took the issue to the local media, making the argument that both Quad Services and Campbell’s Soup had a responsibility to ensure that wages according to the award were paid. United Voice’s secretary argued that:

These guards protect the Campbell’s factory and [it is] Campbell’s responsibility to fix this. That’s what we are calling on them to do. They need to explain to our members how they will ensure they are paid the money they are owed.

Through the continuous pressure of the union, Quad Services finally agreed to pay the total sum owed. In response to the well-earned and hard-fought-for recuperation of unpaid wages, one of the Campbell’s Soup guards commented in the Shepparton News that ‘the guards found it financially very hard’ and that the attempt to achieve a just settlement ‘impacted on many of them mentally, as well as their family life… It is a huge relief and the amount of support we’ve got from Campbell’s has been great. It’s been a long time coming’.

Louisa Buchanan, a hospitality worker writing in Overland, has also pointed out that Fair Work is merely a mediation body and that it does not protect workers’ rights. When pursuing her own case of underpayment, her wages only improved after she questioned her employer and fought for her rights as a union member—not through recourse to law. She urged other hospitality workers to do the same: to stand up and fight for their rights—to stop tolerating subpar working conditions and challenge the normalisation of illegal wages in hospitality. Buchanan’s path to victory at her workplace underpins the spirit of this article, which is that it is through political struggle that workers can seek to rectify their vulnerable positions and reverse the situation of exploitation to one in which they have control of their working conditions.

Industrial action has been taken in other cases where unions have failed to achieve justice via existing laws. Because of the worker-unfriendly laws currently in place, which severely handicap workers’ capacity to take industrial action outside an enterprise-bargaining period, much industrial action is considered illegal. This hugely diminishes workers’ control in the workplace since withdrawing labour is their most powerful, disruptive force. Of course, workers can still take unprotected action, but only unions such as the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) can afford the penalties. When asked in an interview about supporting illegal industrial action by the CFMEU in an interview with the ABC, Sally McManus, president of the Australian Council of Trade Unions (ACTU), said that she believed laws could be unjust and that where that was the case laws could be broken in the pursuit of justice. There is an acute understanding of the failures of the law and the limits to upholding it by the Australian union movement, and of the need to transgress and change the law. The ACTU’s current major campaign, Change the Rules, aims to change numerous industrial laws. It addresses interrelated issues from wage theft to casualisation.

Political struggle and the law

The law’s ability to ensure and enforce fairness and justice for workers does not derive from its own power but through the struggle and power of workers. Even in those cases where the Fair Work Ombudsman succeeds in reclaiming stolen wages, companies often continue their illegal practices because currently there is no legal mechanism to ensure ongoing compliance with the law. Only organised workers can ensure that employers remain accountable and continue to comply with workplace law after a Fair Work Ombudsman investigation has finished. If political struggle and pressure are what ensures that workers’ rights are enforced, what exactly do we mean by political struggle?

Jacques Rancière, in his Ten Theses on Politics, differentiates politics from the political order (or police order). Political order is what we commonly falsely identify with politics: the constitution, the parliamentary system or the judicial system. For Rancière, these systems are regimes of power—what he calls the distribution of the sensible—what is visible and invisible, what is spoken and unspoken. The political order contains the implicit laws and conventions that govern and determine a society’s social and political arrangements. This includes the modes of participation of the society; for instance, of those who are included or excluded, or of what is considered public or private. Rancière gives the example of the transformation of the migrant worker who becomes simply the migrant, a change that strips away the individual’s political subjectivity. What words are sayable or visible in public discourses and what are eluded or invisible have political consequences. The usage of ‘boat people’, for example, instead of ‘asylum seekers’ in our current refugee debate has a similar function.

Politics, on the other hand, is the disruption of the political order: it challenges and reconfigures by redistributing the sensible, or what is visible or invisible, spoken or unspoken, or what demarcates the public from the private. It is interested in the enlargement of the public, an increase in the publics that might participate in political discourse. Politics, as opposed to the political order, is intent on increasing inclusion in political participation. In the Campbell’s Soup example, the security guards are a case in point. Political struggle, then, is the realisation of politics, what Rancière describes as the actualisation of equality, while the legal system and government agencies such as the Fair Work Commission are aspects of the political order.

For Rancière politics and the political order are in constant interaction. It is this interaction that helps us to recognise both the limits of the law and the need to fight for better, fairer laws. For Rancière politics is definitionally democratic—in fact, democracy in respect of politics is ‘the institution of both its subject and its mode of relating’. The subject of politics is the ‘demos’ and the mode of relating is a paradoxical ‘one of both partaking in ruling and being ruled’. In Rancière’s terms the demos—the part who has no part, the uncounted, those whose political subjectivity is unrecognised—makes an argument to an addressee who normally has no reason to see it as an argument to make it count as an argument.

At the Campbell’s Soup factory, making an argument count, making it understandable to those who had no reason to see it as an argument, involved making a private issue between employer and employee into a public issue concerning fairness and justice. The security guards are the demos, the part who has no part, who makes the argument to be counted as the uncounted. It was through the workers making this argument that their previously private matter—their wages and livelihood—became a public issue. Quad Services and Campbell’s Soup then became responsible for fairness and had the responsibility to ensure that the workers were paid what was due to them. In this we can see how argument reconfigures the political order. The subcontracted workers, who through the current judicial mechanism (the FWC) found they had no legal recourse when the company that owed them money went into liquidation, succeeded in winning back their pay.

For Rancière, politics, as a process, a struggle and a disruptive force, is at the core of achieving egalitarian and emancipatory aims. While politics and the political order are distinct, they are intertwined in complicated ways. Politics can reassemble the political order in ways that facilitate and enable future egalitarian aims. The suffragette movement is another example. Women won the constitutional right to vote through political struggle, through their argument to be counted as the uncounted, which reconfigured the political order. Today women’s right to vote is a part of the current regime of power. While this constitutional right is not politics per se, it is the consequence of politics; it is a political order that is more open to enabling future politics through the enlargement of the public sphere.

Rancière’s concept of politics is not one of momentary and fleeting gains or events. To the contrary. The consequence of politics can be long-lasting institutional change. But there is no utopian political order at the end of a political process; there is none that can guarantee our freedoms and rights. As Keith Basset puts it: ‘A Rancièrean politics…has to be simultaneously inside and outside the…[political order], and necessarily engaged with reforms that keep that order as open as possible to new ones and egalitarian demand’. As with the ACTU’s Change the Rules campaign, politics needs to be inside the political order to change it, although it also needs to remain outside it: it cannot be reduced to using the current judicial system. It needs to go beyond the law and be a disruptive force in order to expand the demos, and increase fairness for all.

Rancière has argued that there has been a shift in the Left in which constitutional formal rights have become prioritised over the power of the people to realise principles of justice and fairness, which has, ironically, led to weaker constitutional rights. For Rancière it was precisely when the Left contested such rights as part of the bourgeois establishment that it was strongest. This is because the law, contrary to how it may appear, is not objective: it exists and develops as a consequence of political struggle. As Rancière puts it, ‘the power of the people is always beneath and beyond the [juridico-political form]’. It is beneath because the people found and legitimise the political system, and it is beyond because the power of the people cannot be contained within it. This sentiment was echoed by Sally McManus at the Change the Rules launch when she said, ‘But rules are made by us—by people. And we can change them’. This view, which simultaneously understands the importance of political campaigning for changing law and increasing justice, recognises that the law is both legitimised by the people and can be changed by the people.

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