Employers caught deliberately underpaying workers could face jail time, under new laws the federal government is proposing.

Workplace Relations Minister Tony Burke will tomorrow introduce to parliament legislation that will include beefed up penalties, including greater fines and jail time.

The government is facing backlash from business and employer groups for its broader industrial relations changes.

But Mr Burke told the ABC’s Insiders that this change was about closing loopholes the leave workers facing harsher penalties than employers. 

“If you intentionally, as a worker, take money from the till, it is a criminal offence and it should be. But if the employer intentionally withholds money from your pay, it’s not a criminal offence,” he said.

“That’s a simple loophole, it should be logically simple to close — I’m surprised it’s even been controversial.

“The objective here is not to send people to jail. The objective is to make sure people are paid properly.”

The proposed changes would see a maximum penalty of 10 years in jail and fines up to $7.8 million — or three times the amount that was underpaid if that amount exceeds the maximum fine. 

The government insists criminal penalties wouldn’t apply for “honest mistakes”.

Gig worker changes facing criticism

Mr Burke last week announced plans to introduce new legislation that would give gig workers more rights, including minimum pay rates.

Business groups have dubbed the proposals complicated and burdensome. 

The government asserts that a lack of standards around gig workers has contributed to unsafe work conditions, and estimates at least 13 gig workers have died on Australian roads in recent years.

Under the legislation, the Fair Work Commission would use a new test to determine if someone fits a new class of worker.

That test would ask whether the person is earning income through a digital platform, and whether they are “employee-like”, determined by whether a person has low bargaining power, low levels of control over their work, and lower wages than if they were engaged as an employee.

That will likely affect people working for Uber, Hungry Panda and Doordash but not people finding work through platforms like Facebook, Whatsapp or Airtasker. 

Mr Burke defended that test, insisting the most work being carried out via platforms like Airtasker are different because it’s people, often in trades, supplementing other work.

“That sort of work wouldn’t satisfy the test to be employee-like, and it is three things you need to satisfy to be employee-like that the commission will look at in working out (the test),” he said on Sunday.

“They will look at whether or not you have low control over your work. They will look at whether or not you have low bargaining power, and they will look at whether or not you are being paid less than what you would are being paid if you were an employee.”

Coalition unlikely to support changes

Mr Burke conceded then changes would likely lead to consumers paying more but insisted it would be less than paying extra to “add anchovies to your pizza”.

Opposition Leader Peter Dutton took aim at the government’s broader industrial relations proposals and argued it would increase living costs. 

He told Sky News the criteria the Coalition would consider in deciding on the legislation.

“Does it reduce flexibility for the worker and for the employer? Does it drive up the cost of living for families and small businesses? Does it make it harder for a small business to keep its doors open at a time when the government is making it harder for that business to be successful? he said.

“What we’ve seen so far, it would be very, very difficult for us to support what will be an economy-destroying piece of legislation and just another nail in the coffin of small business.”