Many readers will remember that, prior to the advent of COVID-19, a key topic of discussion at both the Federal and State level was the potential criminalising of "wage theft" (see for example in Queensland and Western Australia), in response to a deluge of allegations of underpayment of employee wages and entitlements. Discussion centred around possible introduction of legislation containing criminal penalties for this conduct.
On 16 June 2020, Victorian Parliament passed the Wage Theft Bill 2020, making Victoria the first Australian jurisdiction to seek to introduce a specific legislative model. It is currently proposed that the legislation will be effective from 1 July 2021.
The legislation has been welcomed by the union movement but widely criticised by employers. There are already suggestions of a potential constitutional challenge to the validity of this legislation, given potential overlap with the civil penalty regime in the Fair Work Act 2009 (Cth).
What will this legislation do?
When this legislation becomes effective it will, in short:
- create various offences in relation to employee entitlements; and
- establish, and confer powers upon, the Wage Inspectorate Victoria and its Commissioner, who would be responsible for enforcement.
When would this legislation apply?
The legislation is presently anticipated to be effective from no later than 1 July 2021.
It should be noted that the legislation would apply to employee entitlements regardless of when the entitlements accrue or have accrued.
Who would the legislation apply to?
The legislation will apply to current and former employers and employees. Bodies corporate, individuals, partnerships and other employers would all be captured.
The employee entitlements in question would usually need to relate to work performed in Victoria, but entitlements for some work performed interstate or overseas will be relevant if there is a sufficient connection with Victoria.
What offences will exist under the legislation ?
The legislation will create the following offences, each of which would attract penalties of up to 6,000 penalty units ($991,320) or up to 10 years' imprisonment:
- dishonestly withholding employee entitlements
- falsification of an employee entitlement record to dishonestly obtain financial advantage or prevent exposure of a financial advantage obtained
- failure to keep an employee entitlement record to dishonestly obtain financial advantage or prevent exposure of a financial advantage obtained
"Dishonest" in this context will be assessed objectively. It is intended to extend beyond intentionally dishonest conduct to recklessness.
Employee consent to a reduction in entitlements will be irrelevant, where this results in the employee being paid less than the minimum required by law.
Other offences with lesser penalties include, for example, hindering or obstructing, or providing false information to, a Wage Inspectorate Victoria inspector investigating a wage theft matter. Adverse treatment of persons involved in providing information and the like in wage theft matters will also be prohibited.
Can individual directors and others be liable for offences?
Yes, in some cases, officers or other representatives of an employer may be liable for offences and exposed to potential imprisonment as a result.
Are there alternatives to prosecution and penalties?
Written enforceable undertakings are a potential alternative that the Wage Inspectorate Victoria may agree to. However, if an enforceable undertaking is not complied with, proceedings may then be commenced in relation to the relevant offence.
What defences will there be?
Generally, an employer, officer or other representative will be able to defend a proceeding if it could prove that due diligence was exercised by taking reasonable steps to prevent the conduct. Accordingly, it will be important for employers to focus on implementing processes to prevent conduct of this type occurring.
It should be noted that failure to comply with the requirements of any regulator (this would include, for example, the Fair Work Ombudsman) would mean that reasonable steps had not been taken.
What powers will Wage Inspectorate Victoria and the Commissioner have to enforce these provisions?
The Wage Inspectorate Victoria and its Commissioner will be given various powers to enter premises, to examine documents and the like. It would be possible to require a person to produce materials or attend and answer questions as part of an investigation.
Next steps
We will continue to monitor developments in this area in in Victoria, at the Federal level and in other jurisdictions. In the interim, please let us know if you have any queries.
