The court system is failing migrant workers trying to recover underpaid wages, a new report claims.

The underpayment of migrant and local workers has been documented for a decade, but the report by the Migrant Justice Institute exposed the difficulties faced in recovering those wages through the court system.

The report, titled “All Work, No Pay”, urges the Federal Government to act to ensure vulnerable workers are paid properly.

It described the small claims court process, meant to be simple and accessible, as “nearly impossible” for many workers to navigate without legal support, which is both scarce and expensive.

Despite the large number of workers underpaid each year, only 137 people took their claims to court in 2022-23, the report said.

The Institute surveyed 4,000 migrant workers finding that over half were underpaid, with 90 per cent taking no action. Only one person went to court and recovered none of their wages.

Report lead author Associate Professor Laurie Berg, of the University of Technology Sydney, sets out a reform blueprint endorsed by 24 legal service providers, community, and anti-trafficking organisations across Australia.

The suggested reforms include: simplifying court processes; creating a new pathway for wage claims at the Fair Work Commission and potentially a new Fair Work Court; increasing funding for legal assistance, and; establishing a government guarantee scheme to ensure workers are paid if employers disappear, liquidate, or refuse to pay.

Prof Berg said there was a need for reform to ensure migrant workers receive their owed wages.

“The court processes must be reformed to deliver migrant workers the wages they’re owed. It is currently almost impossible for many migrant workers to make and pursue wage claims without legal support,” she said.

The report highlighted the illusory nature of workers’ rights if they cannot enforce them in court.

“Workers’ right to be paid correctly under the law is illusory if they can’t enforce that right in court. This is critical to break the cycle of business impunity for exploitation,” it said.

“For most migrant workers in Australia, the risks and costs of making a wage claim outweigh the slight prospect of success. Existing legal processes are complex and inaccessible. This incentivises employers to underpay their workers, assuming that workers will never hold them to account.”

The coalition of endorsers includes organisations such as AMES Australia, the Australian Catholic Anti-Slavery Network, Be Slavery Free, Circle Green Community Legal, the Human Rights Law Centre, and many more dedicated to addressing migrant worker exploitation.

“In reality, few workers file an application, let alone obtain a judgment. In 2022-23, among the hundreds of thousands of underpaid workers in Australia, only 137 small claims applications were filed in the FCFCOA across the entire country,” the report said.

“The Grattan Institute has estimated that between 490,000 and 1.26 million workers are paid below the minimum wage in a year. This figure does not include the many additional workers who were paid above the basic minimum wage but less than their full entitlements, who would have substantial claims for unpaid wages.

“As a result of the inaccessibility of this jurisdiction, hundreds of thousands of vulnerable workers who experience wage theft in Australia are left without recourse, and employers continue to exploit migrants and other vulnerable workers with impunity.

“For these migrants, the risks and costs of taking action substantially outweighed the marginal prospect of success. However, 45 per cent of these participants indicated that they were open to trying to recover unpaid wages in the future.

“This suggests that an investment of resources in reducing the costs and burdens of bringing a wage claim, and increasing the likelihood that workers who bring wage claims will obtain a timely positive outcome, would have an impact on the number of migrants who come forward to enforce their rights.”