Linda Tucker and Sean Stimson from RLC. Photo: Liz Clark

Outlawing unreasonable requests for cash back from employees and higher penalties for franchisors will fail to stamp out exploitation of underpaid workers, legal experts have warned. The proposed laws increase the maximum penalties to more than half a million dollars for contraventions that involve "deliberate and systemic" underpayment of staff. 

The government bill follows revelations in Fairfax Media about rampant underpayment of staff at 7-Eleven, Pizza Hut, Caltex and other chains.

Immigration labour law authority, Joanna Howe, an Associate Professor at The University of Adelaide, said prohibiting exploitation was a step in the right direction but would not ensure unscrupulous employers were caught.

The proposal would give students more confidence to come forward with a complaint without risking losing their visa. "What we know now about these types of employers is they calculate the chance of detection, which they know is slim," Dr Howe said. 

Vulnerable workers rarely complain about being underpaid to avoid risk of losing a temporary work visa or possible criminal charges for compliance with illegal conduct including cash-back scams.

Dr Howe said unscrupulous employers would likely continue to underpay vulnerable workers knowing their chances of being caught are slim.

The federal government has introduced a bill to make franchisors and holding companies for retail outlets and large fast food chains more accountable for wage fraud. 

The proposed bill follows a slew of scandals implicating 7-Eleven, Pizza Hut and Dominos.

Dr Howe said many temporary migrant workers were too scared to complain about being under paid for fear of losing their job and visa.

"Prohibiting the practice does not empower them to come forward," Dr Howe said.

"They fear that they may not find another job if they complain about being forced to hand cash back to their employer.

"Their frame of reference is their home country where the wage rates are lower. They also know that a lot of temporary migrant workers are getting exploited."

Dr Howe said temporary migrant workers in breach of their visa face "very real possibility of deportation" under the Migration Act.

Visa proposal

The Redfern Legal Centre, which provides a statewide legal advice service to international students, said the new bill was unlikely to provide comfort to exploited workers.

The centre has submitted a proposal to the Migrant Workers' Taskforce, chaired by Allan Fels, suggesting the Minister for Immigration issue a special direction against cancellation of a visa as part of section 499 of the Migration Act.

Redfern Legal Centre solicitors Linda Tucker and Sean Stimson said this would allow students forced to work more than 40-hours per fortnight (outside their visa's limit) to raise a complaint without risk of losing their visa. 
"Student employees will not come forward because the risk is their visa will be cancelled and that will always trump any other protections," Ms Tucker said.

"We are not saying it should be a free-for-all, we are asking for an alternative approach to sanctioning that breach which takes into account the context in which the breach occurred.

"We are proposing the introduction of a ministerial direction to give decision-makers a direction to not cancel a visa when a student has breached the 40-hour per fortnight condition."

Mr Stimson said the proposal would give students more confidence to come forward with a complaint if they would not automatically risk losing their visa.

"If there is a certainty around the preservation of a visa the employers will be aware they are exposing themselves to severe penalties," he said.

Fairfax Media contacted Federal Employment Minister Michaelia Cash for comment.