22 June 2020

Criminalising Underpayments: Victorian Wage Theft Bill 2020

This article was written by Murray Kellock and Bridget Sheahan.

On 16 June 2016, 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:

Section

Offence

Maximum penalty

Section 66(1)

Intentionally:

  • hindering or obstructing an inspector or inducing another person to do so;
  • concealing the location or existence of a person, document or thing; or
  • preventing or attempting to prevent others from assisting an inspector.

Body corporate: $49,566

Individuals: $9,913.20

Section 66(2)

Assaulting, directly or indirectly intimidating or threating (or attempt to) an inspector or a person assisting an inspector.

Body corporate: $198,264

Individuals: 2 years imprisonment

Section 67

Not allowing a person assisting an inspector access to the premises.

Body corporate & individual: $9,913.20

Section 69

Failing to comply with a notice to attend without reasonable excuse and/or refusing or failing to answer questions posed by the Wage Inspectorate in certain circumstances.  

Body corporate: $49,566

Individuals: 2 years imprisonment

Section 70(1)

Giving false or misleading information.

Body corporate: $198,264

Individuals: 2 years imprisonment

Section 70(2)

Deliberately producing a document that is false or misleading.

Body corporate: $198,264

Individuals: 2 years imprisonment

Section 76(1)

Persuading or attempting to persuade another person not comply with the Act.

Body corporate: $99,132

Individuals: 1-year imprisonment

Section 76(2)

Refusing to employ or otherwise dismiss or terminate a person because they intend to comply with the Act. 

Body corporate: $99,132

Individuals: 1-year imprisonment

 

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.

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