A new Wage Theft Act 2020 (Vic) (Act) will come into force in Victoria from 1 July 2021. Victoria has become the first state in Australia to pass laws establishing criminal penalties for employers who deliberately don’t pay their workers correctly. Though wage compliance should always be of concern to businesses, now it is paramount for businesses with operations in Victoria to review whether you are meeting your employee wages and entitlement obligations. If not, you might find yourself facing serious criminal and civil penalties.
How does it affect you?
- Employers, directors and officers could be held criminally liable for non-payment or underpayment of wages and other employee benefits, as well as for failing to keep records of employee entitlements.
- Employers who make honest mistakes or who exercise due diligence in paying wages and employee entitlements are unlikely to be found to have committed offences under the new Act.
- The Act has the potential to apply beyond Victoria to businesses based in other Australian states and territories, or even outside Australia.
- Businesses with any operations in Victoria or that have employees performing services in Victoria (temporary or otherwise) should carefully look at whether the new laws apply to them.
What are the new wage theft laws?
The new Act covers wages or salary, allowances and gratuities, annual leave, long service leave, meal breaks and superannuation.
Under the new Act, it will be a criminal offence to:
- dishonestly withhold employee entitlements (including wages); and/or
- falsify employee entitlement records, or fail to keep records in order to obtain a financial advantage or hide a financial advantage.
Penalties of up to $991,320 for bodies corporate or 10 years’ imprisonment for individuals will apply.
An employer may be held liable for the actions of an officer where an officer or the board of directors expressly or impliedly authorised or permitted the conduct, or where a corporate culture existed that directed, encouraged or tolerated the relevant conduct.
Also, directors and officers may be held personally liable for these offences regardless of whether the employer is prosecuted unless they can prove that the officer exercised due diligence to prevent the commission of the offence by the employer.
The Act will apply where an employee performs services wholly within Victoria or where there is a sufficient nexus with Victoria. This could include where an employer is based in Victoria (even if the employee is based outside Australia) or where the services were mainly performed in Victoria (even if the employer and employee are based outside Australia).
Investigating offences and enforcement
Wage Inspectorate Victoria has been tasked with investigating offences and enforcement. The Inspectorate has been given a number of new powers to support its work, including powers to compulsorily obtain information or evidence to determine whether an offence has been committed.
The recent State budget has also announced $9.6 million for the Magistrate’s court to introduce a ‘fast track model’ to hear these new wage theft cases.
It is possible employers will face investigation by the Fair Work Ombudsman and the Wage Inspectorate Victoria. The new Act has been criticised for overlapping with national laws being proposed by the Federal Government to criminalise serious underpayment cases, and may be subject to constitutional challenge at some stage.
When does it come into Effect?
The law will come into effect from 1 July 2021 and will only look at conduct which happens after this date. However, if the Inspectorate finds that wage theft has occurred, they can look at employee entitlements which have accrued before 1 July.
Now is a good time to review whether you have paid all your employee entitlements under applicable modern awards, enterprise bargaining agreements and employment contracts. To get started, this article talks through what to look for to make sure you’re wage compliant: https://www.workplacewizards.com.au/why-to-prioritise-award-compliance/
Reviewing your contracts will also be especially important if you have altered your employee contracts after new changes to casual employment. For example, if an employee has become permanent; has their loading changed? Do they now have annual leave entitlements? Do they have different penalty or overtime rates? To know more about the changes to casual employment you can view the article here: https://www.workplacewizards.com.au/new-changes-to-casual-employment/
If you find that maybe you have missed out on paying some entitlements, there are steps you can take to fix this! The Fair Work Ombudsman has put together a step-by-step process of what to do if you have found that you have underpaid your employee. To access this, you can visit here: https://www.fairwork.gov.au/workplace-problems/common-workplace-problems/i-think-ive-underpaid-my-employee
Of course, we are here to support you if you have any concerns or questions about these new changes or compliance generally. Feel free to reach out to our consultants if you would like some advice!