Victoria’s new Wage Theft Bill and what it means for employers

On 16 June 2020, the Victorian Wage Theft Bill 2020 was passed by the Victorian Parliament and will be known as the Wage Theft Act 2020 (Vic) (“Act”) when it is introduced next year. The new wage theft laws will establish new criminal offences targeting employers who deliberately underpay wages and other employee entitlements.

The new laws create three primary offences, each of which attracts penalties of up to $991,320 for companies, $198,264.00 for individuals or up to 10 years’ imprisonment. These offences are:

  • dishonestly withholding employee entitlements or expressly or impliedly authorising or permitting another person to do so;
  • falsification of employee entitlement records to dishonestly obtain a financial or to prevent the exposure of a financial advantage having been obtained; and
  • failure to keep an employee entitlement record to dishonestly obtain financial advantage or to prevent exposure of a financial advantage having been obtained.

The new laws require dishonest intent, which differs from the current underpayment provisions in the Fair Work Act 2009 (Cth). “Dishonest” is assessed objectively.

Employers who make honest mistakes or who exercise due diligence in paying wages and employee entitlements will not be guilty of wage theft under the new laws. However, they may still be guilty of contravening the Fair Work Act and face prosecution by the Fair Work Ombudsman, even if the contravention wasn’t deliberate.

The Act will operate alongside all other obligations owed by employers under federal laws and any other industrial instruments they are covered by.

Even where an employee appears to have consented to the underpayment, this is irrelevant if it results in the employee being paid less than the minimum required by law. All employers are expected to take all reasonable steps to pay the correct entitlements owing to its employees.

It is not expected that the Act will commence until 1 July 2021, which will give employers time to rectify any issues.

Who will enforce the new Wage Theft Laws?

The Act also establishes the Wage Inspectorate Victoria who will be responsible for enforcing these new laws. As a statutory authority, they will have powers to investigate and prosecute wage theft offences under the Act.

The Wage Inspectorate Victoria will be given a broad range of powers to perform its role including exercising entry, search, and seizure powers (either with consent or pursuant to a warrant), compelling persons to answer questions or requiring production of certain documents (including employee records).

Employers may be able to enter into enforceable undertakings with the Wage Inspectorate Victoria to avoid criminal prosecution.

What should my business do?

Given that Victorian employers are now at risk of being prosecuted at both state and federal level, it is now more important than ever that employers keep on top of their obligations to employees and avoid underpayments.

Employers should ensure that:

  • employees are being paid in accordance with any applicable Modern Award, Enterprise Agreement, and/or employment contract;
  • employee records are being kept and maintained in accordance with Fair Work Act 2009;
  • roles and positions are regularly reviewed to ensure employees are appropriately classified;
  • the corporate culture of the company is not one which would authorise or permit underpayments; and
  • HR, management and payroll are provided with appropriate training.

To make sure you are paying your staff correctly, or for any other questions about employing staff, Robertson Hyetts is here to help.  For further advice please call us on 5434 6666 or 5472 1588.