Despite agreeing ‘in principle’ to include them in employee protections, the federal government has done nothing in six months

Oppressed for his religious beliefs and driven from his job, Fu Cong fled China for safety and a new life in Australia, seeking, in his words, “fairness and justice”. He found, instead, a prolonged but perfectly legal exploitation.

Having joined the banned Falung Gong spiritual group persecuted as “anti-government” by the Chinese Communist party, Cong lost his job as a teacher after nearly two decades of service. He made the “agonising” decision to leave his home town in north-east China for a land, he had read, was fair and egalitarian.

“Moving to a foreign place on my own and at my age is extremely difficult. I’ve lost count of the number of times my wife and I cried over the decision. It was incredibly painful.

“If it wasn’t for the fact that I was completely out of options in China I wouldn’t have taken such a huge risk.”

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Cong arrived in Australia by plane and lodged a protection claim as a refugee. While his claim was assessed by the Australian government, Cong was granted a bridging visa with work rights, and after initial difficulty finding employment, he found a job in a printing company in suburban Melbourne.

The work was difficult and the hours long, but it was steady employment, and slowly Cong built a life and a community in Australia. However, unbeknown to its employees, the printing company was trading while insolvent and declared bankruptcy without warning in October last year.

Cong was left with nothing more than a string of dishonoured paycheques. He is owed about $5,000 in unpaid wages and redundancy entitlements.

“I was on an overnight shift the day we found out the factory went bankrupt and we all still went to work unaware of the situation. It was only when one of my co-workers called our boss, we were told that we no longer had jobs,” Cong told the Guardian.

“Before this, I had several salary cheques that were dishonoured by the bank and had no idea why. I was completely shocked, it was an awful time.”

Facebook Twitter Pinterest ‘I came to your country to seek refuge... As long as you are legally allowed to work in Australia, you should receive equal support.’ Photograph: Christopher Hopkins/The Guardian

In 2012, the Australian government established the Fair Entitlement Guarantee (FEG), which protects the employees of companies which go bankrupt. Australian citizens and permanent residents are entitled to up to 13 weeks of unpaid wages, as well as any unpaid annual leave and redundancy pay.

But migrant workers such as Cong receive nothing. More than 900,000 temporary migrants in Australia with work rights are excluded from the FEG, despite repeated calls that they are among the most vulnerable workers in Australia, at significant risk of exploitation by companies going into liquidation, and should be protected.

Matt Kunkel, the director of the Migrant Workers Centre, told the Guardian some companies that employed large numbers of migrants were deliberately using liquidation as a tactic to avoid paying entitlements, or forcing workers into accepting smaller settlements. He said measures to counter phoenix companies – companies created “from the ashes” of another, taking over the business of a company that has been deliberately liquidated to avoid paying its debts – were not working.

“There is no accountability for employers who can shut up shop and open up again the following day with a new name, wiping away tens or hundreds of thousands of dollars of worker entitlements. When caught underpaying staff, some employers have expressly threatened to go into liquidation as a tactic to force workers to accept a smaller settlement. This move is only available to employers because temporary migrant workers have no access to the FEG scheme to recover their unpaid entitlements.”

In March this year, the Migrant Workers Taskforce headed by former Australian Competition and Consumer Commission boss Alan Fels recommended the FEG be extended to cover migrant workers, or an equivalent scheme established to protect them. The taskforce found it was “inequitable for migrant workers … to be treated differently to Australian citizens”.

“As taxpayers, they contribute to the cost of the Fair Entitlement Guarantee.”

The taskforce heard extending the FEG to migrant workers would cost about $20m, but that “these costs would be reduced, however, the more successful the government is in dealing with phoenix traders”.

The government accepted “in principle” to all 22 recommendations from the taskforce, saying “these workers have been doing the right thing by satisfying their taxation obligations, the government considers it reasonable that they, in turn, be protected by the FEG program”.

However, six months on the government has not yet begun consultation on the issue.

A spokesman for the industrial relations minister, Christian Porter, told the Guardian: “In response to the Migrant Worker Taskforce, the government agreed to examine the extension of the FEG to migrant workers with work rights.

“Details of timing and the mechanism for consultation on this proposal will be outlined in due course.”

Kunkel told the Guardian the Migrant Workers Centre had seen dozens of cases of migrant workers left with nothing by a liquidated company.

“It is not unusual for individual claims to mount into the tens of thousands of dollars if they have a long period of service.”

Migrant workers, often vulnerable already, face the threat of homelessness, relying on charity to feed their families, or being driven into the black economy to survive, Kunkel told the Guardian. The Migrant Workers Centre has seen liquidations across industries, but particularly in those where the rates of migrant employees are high, such as hospitality, construction, labour hire, meat processing and waste recycling.

Adjunct fellow at Swinburne University’s Centre for Urban Transitions, Peter Mares, said the continued exclusion of temporary migrant workers from the FEG was “unconscionable”. He estimates more than 900,000 migrant workers in Australia are potentially excluded from the FEG.

“The principle of the FEG is that a worker, who, through no fault of their own, loses out on an entitlement when a company goes bust, should be protected. There is no reason why a temporary migrant worker should be treated differently to a citizen or permanent resident. They have suffered the same loss.”

Mares, the author of Not Quite Australian which examines temporary migration in Australia, said the cost to government of expanding the FEG to migrant workers was marginal, and that he could see “no impediment” to what would be a simple legislative reform.

“This is an example of what happens when you’re not represented, when you don’t have a political voice. Migrant workers are less likely to be represented by a trade union, at an even more basic democratic level you’re simply not represented, you don’t have a vote, you don’t have a local member. Your interests are going to count less.”

Heloise Williams, an employment lawyer for not-for-profit legal centre JobWatch handling Cong’s case, said his treatment was reflective of a broader legislative discrimination against migrant workers, who were acutely vulnerable – particularly if they faced language barriers, were unaware of their workplace rights, or if their visa was tied to a specific employer.

“I’ve seen some awful things play out because the employer knows they have the power in those relationships and because the workers themselves aren’t aware of their rights under Australian law.They will often get underpaid and be asked to work incredibly long hours.”

Cong says he has despaired at how he has been treated.

“I came to your country to seek refuge, I’ve been exploited and received no support from the government, is this the democracy and just treatment of those in need that Australia talks about?”

He said he realises his hopes of ever being paid are slim, but he hoped the laws would be changed so that other migrants would not be similarly exploited.

“As long as you are legally allowed to work in Australia, you should receive equal support.”