Joellen Riley, Professor of Labour Law at Sydney Law School, discusses the unhealthy hangover of the WorkChoices era – ‘pizza pay’ – and its eradication under current workplace laws.
At the height of the ‘Your Rights at Work’ campaign against WorkChoices in 2007, stories were passed around about fast food workers being ‘paid’ for additional work time by being given leftovers from the kitchen – otherwise known as ‘pizza pay’- for the overtime undertaken in cleaning up the restaurant, or closing tills. At the same time, there were stories of wait staff suffering deductions from their pay to cover the bills of restaurant patrons who ‘did a runner’ and left without paying the bill.
I am pretty sure that many of these stories were true. One of my own daughters was ‘paid’ for closing and cleaning time at a bakery in leftover sticky buns. Given that her pay rate for half an hour’s work was barely $3 at the time, she considered herself generously rewarded. In the same job, her first $50 of earnings (which took her at least three casual shifts to earn) were withheld to cover the cost of her t-shirt bearing the company logo. She was obliged to keep this shirt laundered at her own (or rather her mother’s) expense. My other daughter worked in a city café for two full days without any pay, on the basis that these were ‘training shifts’, even though she had two year’s casual work experience in a similar establishment. When the proprietor purported to require the unpaid training shifts to be extended for more days, she wisely declined to continue in the position. Fortunately, in these modern times, slavery is voluntary.
It was never entirely clear whether these arrangements were legal even at the time. Those staff who were on the federal minimum wage for their hours of work, or who were covered by an award, would have been entitled to receive their wages in money, because they continued to enjoy the benefits of state-based Truck legislation. Truck enactments date from as early as 1646 in England, and were intended to stop the exploitative practices of some masters who purported to pay their labourers in goods, valued at the master’s discretion. These kinds of practices have a long pedigree. For the history of and policy behind Truck enactments, see Lord Ackner’s opinion in Bristow v City Petroleum Ltd  1 WLR 529, at 532-535. Bristow was a case about a petrol service station attendant who won his complaint against his employer for deducting till shortages from his wages.
When WorkChoices overrode state industrial legislation in respect of private sector incorporated employers, it made an exception for state laws dealing with the method and frequency of wage payments, and deductions from wages. Nevertheless, employers could legitimately use Australian Workplace Agreements to justify these practices, so long as they provided workers with their minimum Australian Fair Pay and Conditions Standard entitlements, because any workplace agreement could override an inconsistent state law. The short-lived ‘fairness test’ introduced by the Howard Government in its last months in office did not clearly outlaw such arrangements, so long as the workers received some valuable compensation for the reduction in real pay. Who is to say whether a pizza (albeit a stale one, at the end of the day) is worth more or less than half an hour’s cleaning time by a junior casual kitchen hand?
Following the enactment of the Fair Work Act 2009 (Cth) it is clear that ‘pizza pay’ is not a legitimate way of paying staff – at least, not in substitution for the wages due for ordinary or overtime hours under a modern award, enterprise agreement or other industrial instrument. The Fair Work Act s 323 provides that employers must pay their staff fully in money (ie. in cash, cheque or electronic funds transfer). There is no provision for individual contracting out of this obligation, and if an employer does purport to pay an employee in pizzas, s 327 provides (in effect) that the employee could still recover their full wages entitlement, without any set-off for the value of the pizza. Section 323 is also a civil remedy provision, which means that an employer may be liable to a fine of up to 60 penalty units for a contravention. So employers who offer up leftovers to staff must now treat these benefits as gratuitous bonuses.
Arguably, deductions from pay for breakages and till shortages are also illegitimate under the Fair Work Act ss 324, 325 and 326. Section 324 explicitly permits deductions related to salary sacrifice arrangements, however it precludes any deductions from wages that are not authorised by the employee and ‘principally for the employee’s benefit’. So deductions to cover the bills of patrons who ‘do a runner’ are prohibited. Section 326 provides that any term in an employment contract (or an award or enterprise agreement, for that matter) will be of no effect if it purports to permit deductions for the employer’s benefit, and which are ‘unreasonable in the circumstances’. The Fair Work Bill Explanatory Memorandum, at paragraph , gives a fine for lateness as an example of an unreasonable and therefore unenforceable deduction. So employees cannot be pressed to consent to unreasonable deductions.
It appears however that employees can still be required to purchase their uniforms and tools from the employer, although there is a constraint of ‘reasonableness’ imposed on employer requirements in this regard. Section 325 prohibits an employer from directly or indirectly requiring an employee to spend any of their wages if the requirement is ‘unreasonable in the circumstances’. The Fair Work Bill Explanatory Memorandum, at paragraph , gives the example of the tradesman required to purchase tools as an example of a requirement that ‘may be reasonable’. (The example given of an unreasonable requirement is an obligation to make a donation to a charitable or religious organisation.) It would be open for an employee to contest the price charged by the employer for the tools or t-shirts as unreasonable. There is scope for making Regulations to clarify these provisions. Presently Fair Work Regulation 2.12 provides that for the purposes of s 326, employer deductions for the provision of goods and services will only be ‘reasonable’ if they are provided to the employee at no less favourable terms than the employer provides those goods and services to the general public.
Recent news about ‘training shifts’ and other unpaid working time is also encouraging. Following an investigation by the Workplace Ombudsman, a major retailer, Cotton On, agreed to provide back pay to employees in respect of previously unpaid training sessions and staff meetings.
These are all welcome developments. As the history of Truck legislation demonstrates, employers often fall into the temptation of believing that their employees are sufficiently well-served by receiving payment in kind rather than cash. Some take the view that training and experience are so valuable in a tight job market that provision of training is a good substitute for any wages at all. The emergence of the unpaid internship in many sought-after professional fields is an example of this kind of exploitation of young and ambitious workers. But these kinds of arrangements deny employees the economic freedom to spend or save their wages as they choose. If liberalism is to keep faith with its own philosophy, that working citizens are autonomous economic actors in the market place, they must be entitled to receive payment for their work in ‘the coin of the realm’ (as the original Truck Acts provided). As the WorkChoices years showed, it is easy, even in a modern economy, to slide back into feudalism at the workplace. It is to be hoped that the Workplace Ombudsman’s office will be vigilant in enforcing these new Truck provisions in the Fair Work legislation.
Joellen Riley is a Professor of Labour Law at Sydney University Law School.