Criminalising Underpayments: Victorian Wage Theft Bill 2020

This article was written by Murray Kellock and Bridget Sheahan.

On 16 June 2020, the Victorian Parliament passed the Wage Theft Bill 2020 (Vic) (Act), making Victoria the first Australian jurisdiction to introduce such a model. There are suggestions of a potential constitutional challenge to the validity of the legislation given its potential overlap with the civil penalty regime in the Fair Work Act 2009 (Cth).  This alert provides a brief summary of the key aspects of the Act.

Overview  

In short, the new legislation:

1. creates various criminal offences in relation to employee entitlements, including underpayment and falsifying records; and
2. establishes a state-based Wage Inspectorate with wide investigative powers.

The Act is awaiting assent but is anticipated to be effective from no later than 1 July 2021.

Key takeaways

• Directors and officers of an employer may be liable for offences and exposed to potential imprisonment as a result.
• Employers and/or individuals will only be liable to the extent to which underpayment is the result of deliberate or reckless conduct rather than inadvertent conduct.
• Written enforceable undertakings given to the Wage Inspectorate may be an avenue to avoid prosecution.

Underpayment of employee entitlements

Employee entitlements include:

• wages or salary;
• allowances and gratuities;
• attribution of annual leave and long service leave;
• meal breaks; and
• superannuation.

The Act creates three primary offences, each of which attracts penalties of up to $991,320 for body corporates or up to 10 years' imprisonment for individuals. These 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.

"Dishonest" is to be assessed objectively. Consent from employees for any underpayment is irrelevant where this results in the employee being paid less than the minimum required by law.

Moreover, body corporates and/or its officers may be liable for the offences committed by the other irrespective of whether the body corporate/officer has been found guilty of the offence.

Wage Inspectorate Victoria

A new Wage Inspectorate Victoria, headed by a Commissioner to be appointed supported by inspectors, will enforce the Act through various powers to:

• investigate possible employee entitlement offences;
• enter premises with consent, notice (in limited circumstances) and/or with a warrant to search and seize documents or other things (Victoria Police officers may enter the premises specified in the warrant by force if necessary);
• compel the production of documents and records and/or compel a person to give evidence;
• make recommendations to a range of bodies such as the Victoria Police and the Australian Federal Police; and
• accept enforceable undertakings.

There are also a number of lesser offences relating to the Wage Inspectorate, including for example:

We will continue to monitor developments in this area, both at the State and Federal level.

Please reach out to your KWM contact if you would like further advice.