Our Biggest Underpayment Case May Uncover A Few Surprises

The industrial relations community was staggered last week when Australia’s senators decided to demand that the government investigate what is potentially the nation’s biggest wage underpayment scandal. If shown to be correct, the alleged underpayment of NSW and Queensland coal miners will involve repayment of more than $100m.

The coal miners were employed by a series of labour hire companies, but the alleged underpayment agreements were approved by the CFMEU, which negotiated and signed a number of them. In addition, each agreement was approved by the Fair Work Commission, which now faces scrutiny.

The $100m-plus alleged underpayment would have remained concealed but for the only former coal miner in the parliament, Senator Malcolm Roberts. A small group of coal miners informed Roberts they believed they were not being paid correctly, prompting his investigation.

Roberts — now part of the One Nation party — explained to parliament how the scheme was constructed. He set out how a clause in the Black Coal Mining Industry Award made it illegal for mine employers to have casual employees, but five labour hire companies found a way around this.

The mining companies quickly agreed to allow casuals to mine their coal at lower rates offered by the labour hire groups, who had negotiated agreements with the CFMEU. These agreements allowed hiring miners on a casual basis without paying the Australian standard 25 per cent premium for casual labour.

According to Roberts, independent experts calculate these casual mine workers should be paid $151,606 annually, but instead receive an average of $118,315. Multiplied by thousands of miners over at least six years, the amounts of underpayment are unprecedented in Australia.

The agreements were presented to the Fair Work Commission for approval and were approved based on a dubious legal technicality. The coal labour agreements are subject to the “better off overall” or BOOT test, but because the black coal award makes it illegal for coal miners to hire casuals, the test does not apply.

Roberts describes this arrangement as “legal trickery” and that an active union would have opposed it. The Fair Work Commission approved the enterprise agreements after lengthy legal arguments and refused to make changes despite Roberts' representations.

Roberts also made direct representation to Workplace Relations Minister Tony Burke, seeking responses to the coal miners’ alleged wage theft in light of the Labor government’s loophole bill. Burke did nothing, but the Senate has now added a clause to the 700-page industrial relations bill stating that the so-called loopholes act does not address concerns about the underpayment of casual miners.