‘I’ll pay you $12 an hour, but that will be $11 after I take out tax,’ my soon to be boss explained. ‘Tax?’ I thought to myself, ‘No one who is paying a 19 year old $12 an hour is also paying tax’. Of course I was right, over my short period of employment at the restaurant I estimated that at least 60% or their wait staff were paid cash-in-hand. They’d started ripping me off from the very second I agreed to an unpaid trial, and that dollar taken out of my pay for ‘tax’ was no exception. After angrily resigning from that restaurant, I went on to work two more cash-in-hand jobs before I finally earned a place on the books. When your ‘payslip’ is a sticky note with ‘3 hrs – Monday night – $33’ written on it, you can probably assume there’s some shady dealing going on, but not all cash-in-hand jobs are as obviously dodgy.
The act of paying in cash is not, in itself, illegal. What is illegal is a business paying cash to hide their income, and therefore avoiding tax. It’s not uncommon, especially in industries like hospitality or manufacturing, where there are a large number of manual labourers or low level employees. A quick search on gumtree will show you how easy these jobs are to find. So why work for cash-in-hand? The perks seem endless; instant pay, no taxes, the ability to earn Centrelink benefits while working.
Or maybe sometimes you just need the money too much to question how you’re getting it. It can be hard to stand up to a potential employer and insist that you are hired in an above board manner. But there are some pretty good reasons why more of us need to do just that.
Firstly, you have to work out who exactly is losing out when you get paid cash. Most people assume it’s just the government, missing out on taxes. Well yes, and although that will have an effect on you indirectly, it probably won’t be enough to curve your decision. Ok, so who else? Well, you. Me. Ultimately all of us.
When you accept a cash-in-hand job, you are forfeiting some of the rights that unions and rights movements have always fought for. First of all, cash-in-hand allows the employer to set the wage as low as they like. As long as someone would feasibly work for it, why pay more? It’s a chain reaction, ‘If the cafe next door is only paying their kitchen hand $13 an hour, why should we be paying ours $16?’ I’d like to live in a world where you could trust all businesses to treat their employees with respect, but unfortunately I do not. They will pay you the lowest wage they think you will accept. There is nothing more frustrating than working long shifts for a wage that you know is actually $5 lower than the legal minimum. Aside from that, you will be missing out on superannuation. For most of us, the period in our lives where we are working low level jobs is when we are young and fairly unconcerned with things like super funds. Still, we all want to retire someday and as far as I’m concerned, the earlier the better. Those hours you work are worth a lot to your older self, but if your employers aren’t paying super you are robbed of that value.
Perhaps these reasons don’t apply to everyone. There may be some people whose cash-in-hand jobs pay pretty well, but what about insurance? If you fall from a ladder and break your arm at a cash-in-hand job, do you think you’ll be able to claim workers compensation insurance? Do you think it’s likely that your boss will continue to pay you while you are unable to work? What’s to stop them firing you as soon as you are of no use? In fact, what’s to stop them firing you at any point? This lack of security is one very good reason to demand better.
My last reason is perhaps less compelling, but equally sound. If you are found out by the tax office, you could find yourself footing a very large bill for the tax you have been avoiding. It probably doesn’t happen to people often, but it happens. Don’t let it be you.
Written by Ella Salome