Company bosses should be disqualified from boards for underpaying workers, Christian Porter says

Paul Karp
Photograph: Mick Tsikas/AAP

Christian Porter has suggested company directors could be disqualified from ­sitting on boards for underpayment of workers and endorsed union calls for a new small claims process to grant compensation.

In an interview with the Australian following the $300m underpayment of salaried staff at Woolworths, the attorney general and industrial relations minister said that “for a substantial section of corporate Australia, they just don’t get it, and the message isn’t getting through”.

Porter’s comments foreshadow a tougher than expected response to underpayments when it releases a discussion paper on the issue in coming weeks, although criminal penalties are only likely in the case of serious, deliberate and systemic wage theft.

Related: 'They're madly checking their payrolls': the ugly truth of Australia's underpayment epidemic

The Australian Council of Trade Unions has lobbied the government for criminal penalties and a small claims process for the Fair Work Commission to rectify underpayments without the need to go to court.

Porter told the Australian the small claims process is “a good idea” that would address an apparent “gap in the market” and allow workers to have their concerns about underpayment dealt with quickly and efficiently.

Porter said the law is not currently providing effective deterrence and that if corporate Australia had its “eye on the ball” the spate of recent underpayments “wouldn’t happen”. However, he said it is “monstrously unlikely” big companies are underpaying workers deliberately.

“I accept that some awards are complicated, particularly in the restaurant and retail environments, but these are unbelievably very sophisticated organisations — Bunnings, the ABC, Maurice Blackburn, Woolies — and they have huge HR departments.

“These organisations have a massive amount of time, energy and resources devoted to ensuring they don’t pay a cent more tax than they have to; they get involved in sporting teams and social issues.

“If they put commensurate resources into making sure they got their payrolls working in accordance with [enterprise agreements], awards and the law, they wouldn’t be having this problem.”

Porter proposed adding to the list of directors’ duties in the Corporations Act to include the responsibility to ensure their companies pay staff correctly, allowing the Fair Work Ombudsman to pursue banning orders if they failed that duty.

“This would provide the real potential that directors of companies that fail to pay their staff ­appropriately could lose their position and the ability to hold directorships in the future for a period of time,” he reportedly said.

“Any such changes would therefore apply to directors of Australia’s largest companies.”

Related: Rockpool accused of tampering with time-sheet records to cheat workers of $10m

In the final sitting weeks of 2019 the Coalition is set to push through its bill to increase court powers to deregister unions or disqualify their officials.

One of the key union counter-arguments against the proposal was that directors of companies responsible for underpayment, such as George Colombaris, are not currently subject to disqualification.

Porter can guarantee passage of the bill by making amendments to accommodate Centre Alliance while counting on the vote of Jacqui Lambie, who will vote for it because controversial unionist John Setka has refused to resign, or seek to push it through with Lambie and One Nation’s support.

The proposal for director disqualifications is likely to be met with scepticism by Labor, which has accused the Coalition of failing to deliver on its commitment to create a director identification number to prevent phoenixing, a process whereby businesses go broke to avoid paying worker entitlements.

Labor has circulated amendments which will force the government to vote on the director identification number in parliament, but the Morrison government has repeatedly pulled the combatting illegal phoenixing bill from being debated and voted on.