Jul 8, 2021
Victoria criminalises wage theft
The issue of underpayment and wage theft has become a prominent one in Australia’s employment landscape. As the list of companies found to be underpaying staff grows, so too do the State and Federal Government’s measures to stamp it out.
In June last year, the Victorian Parliament passed the Wage Theft Bill 2020 (Vic) (Act). It was the first Australian jurisdiction to criminalise wage theft, followed shortly by the ACT and Queensland. The Victorian Wage Theft Act is now operative, making it a crime for an employer to commit wage theft.
These new laws will see the most severe ramifications in history for Victorian businesses and employers that don’t comply. Employers should therefore be vigilant in implementing systems that ensure compliance with relevant workplace laws, regulations, awards, and enterprise agreements.
Victoria’s new legislation
An estimated 13 per cent of the Australian workforce is underpaid, rising to 21 percent in retail, hospitality, construction and healthcare. This totals an estimated $1.35 billion in underpayment annually. Furthermore, 82 per cent of hospitality workers reported having been underpaid in their career.
As of the 1st of July 2021, it is now a criminal offence for an employer to:
- deliberately underpay workers;
- dishonestly withhold wages, superannuation or other employee entitlements;
- falsify employee entitlement records to gain a financial advantage; or
- avoid keeping employee entitlement records to gain a financial advantage.
Victoria’s wage theft laws target employers who deliberately and dishonestly withhold wages and other worker entitlements. Honest mistakes made by employers who exercise due diligence in paying wages and entitlements are not considered wage theft and are therefore not covered by the criminal offence.
These laws do not impose new record-keeping obligations on employers given the various pieces of legislation already requiring employers to keep employee entitlement records, including about allowances, annual leave and long service leave. The laws do however make it a crime to deliberately falsify these records or fail to keep them in order to gain a financial advantage or prevent the exposure of a financial advantage.
Penalties for non-compliance
Employers found to be deliberately stealing from their workers can now face jail time under the new Act, of which they are liable to imprisonment for 10 years. Maximum financial penalty for an individual can be up to $200,000 or up to $1 million for companies.
Speaking on the announcement of the new laws in June last year, former Victorian Attorney-General Jill Hennessy said employers who commit wage theft deserve to face the “full force of the law”.
“We promised to criminalise wage theft and we have delivered on that promise — employers who steal money and entitlements from their workers deserve to face the full force of the law,” she said in a statement.
Who can be charged under the Victorian wage theft laws?
The offences apply to employers and to ‘officers’ of that employer.
Which roles are considered ‘officers’ depends on the entity type of the employer, but it generally applies to roles that have significant decision-making responsibilities within a business, such as:
- office holders
- people who may make substantial business decisions on behalf of the employer
The Wage Theft Act 2020 specifies who is considered an ‘officer’ of an employer.
What is the role of Wage Inspectorate Victoria?
Wage Inspectorate Victoria has been established to promote and enforce the Victorian Wage Theft Act and some other Victorian workplace laws. The legislation gives Inspectors powers to:
- enter premises;
- obtain information and documents;
- seize evidence;
- require a person to give evidence or answer questions under oath or affirmation; and
- apply for and execute search warrants.
If Wage Inspectorate Victoria believes that a wage theft offence has been committed, the Inspectorate can take several steps, from issuing aa formal written warning to pursuing criminal proceedings.
What employers should do
Due to the complexity of modern industrial obligations, it is perhaps not surprising that errors in pay are made, which is why it is crucial for employers to apply rigorous systems to ensure all employees are paid in line with modern awards, industrial agreements, superannuation and penalty rates.
If you are concerned that there might be errors in your payroll system, or simply wish to have peace of mind, it can be useful to engage a third-party to complete a professional audit to ensure compliance. This provides employers with accurate information to establish the extent of any errors, and how to rectify them.
If you need assistance navigating salary clauses, modern awards and other salary considerations, the Bayside Group can help through our Employment Compliance services. Contact our experienced Workplace Relations team today.