Third party reliance on super underpayment ineffective

Worker-driven social responsibility (WSR) initiatives are effective in addressing labour risks and ensuring compliance such as identifying wage and superannuation theft, according to the Australasian Centre for Corporate Responsibility (ACCR) and industry super fund LUCRF Super.

In a submission to the Senate inquiry on unlawful underpayment of employees’ remuneration, the joint submission said the two organisations supported measures to increase penalties. However, these penalties needed to be extended to companies at the top of supply chains.

It noted that increased penalties and liabilities alone would be ineffective if workers did not have a formal role in ensuring compliance and that workers need to be protected from any adverse actions when raising underpayment claims.

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“Worker-driven social responsibility initiatives, which put workers and their representatives at the centre of due diligence processes, are effective in addressing labour risks and ensuring compliance,” the submission said.

“These schemes recognise that ‘the best auditors are the workers themselves since they are continually present at the production site’. WSR initiatives support workers to raise workplace issues early, allowing businesses to resolve them ‘before they escalate into more lengthy and complex disputes that may come at a high cost’.”

The organisations said they were particularly concerned about companies’ reliance on whistleblower hotlines, third party audits, and other voluntary compliance initiatives to mitigate labour risks in their direct operations, and in their broader supply chains.

“Decades of research into workplace compliance initiatives in global supply chains have found that voluntary self-regulation and “private compliance initiatives” (codes of conduct, auditing, etc.) are insufficient to effectively manage business and operational risks from labour violations in supply chains.”

Third party audits, it said, were insufficient in understanding workplace issues such as harassment, wage theft, excessive overtime, and freedom of association violations, and distorted the realities of a workplace.

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