In brief

On 1 July 2021, the Wage Theft Act 2020 (Vic) (“Act“) will come into effect. The Act makes it a crime for an employer to deliberately underpay employees, to dishonestly withhold employee entitlements or to fail to keep proper records of employee entitlements in order to gain a financial advantage.

These crimes are punishable by a fine of up to AUD 198,264 or 10 years jail for individuals, and a fine of up to AUD 991,320 for companies.

Do you have Victorian employees? Read on for full details about the changes, and answers to frequently asked questions.

In detail

Background

In March 2020, the Victorian Labour Government introduced the Wage Theft Bill 2020 (“Bill“) with the aim of addressing common underpayment issues affecting businesses and employees. The Bill set out various criminal offences, and proposed to establish a Wage Inspectorate of Victoria to investigate and prosecute wage theft offences.

The Bill was passed on 16 June 2020, with the Act coming into force on 1 July 2021.

What offences are contained within the Act?

The Act imposes criminal sanctions for employers who:

  • dishonestly withhold all or part of an employee’s entitlements.
  • falsify an employee entitlement record in order to obtain a financial advantage for the employer or another person, or to conceal a previously obtained financial advantage.
  • fail to keep an employee entitlement record in order to obtain a financial advantage for the employer or another person, or to conceal a previously obtained financial advantage.

An ’employee entitlement’ means any amount or benefit owed by an employer to an employee, including wages or salary, allowances, leave entitlements, meal breaks or superannuation in accordance with the relevant laws, contracts and agreements (whichever is more generous).

An ’employee entitlement record’ means the employer’s records of all entitlements owed to their employees.

Who can be charged under the new laws?

The new offences apply to employers and individuals within an employer. An individual can be charged with an offence if they are an ‘officer’ of an employing entity.

The definition of ‘officer’ ‘is broad and not limited to owners and company directors. The definition varies depending on entity type, but generally includes individuals who have key decision-making capabilities including:

  • company directors
  • office holders
  • partners
  • other people who have the capacity to significantly affect the entity’s financial standing.

What is the Wage Inspectorate?

The Act establishes a new statutory body that has various functions including:

  • informing and educating people about their rights under the Act.
  • monitoring and promoting compliance with the Act.
  • investigating possible offences.
  • bringing criminal proceedings in relation to offences.

The Act also makes it an offence to intentionally disallow, obstruct or hinder the Wage Inspectorate from performing their functions.

The Wage Inspectorate will be led by appointed Commissioner Robert Hortle. Investigations will be carried out by ‘inspectors’, who will have the authority to enter workplaces and undertake searches and seizures of employee records held by employers. Additionally, inspectors can also require an individual to answer questions or produce documents.

While it is not yet clear how the new laws will interact with the existing Fair Work Act 2009 (Cth) in practice, it is possible that employers could be investigated by both the Wage Inspectorate and the Fair Work Ombudsman in relation to the same conduct. Further, both regulators could potentially take action against an employer under the Wage Theft Act and the Fair Work Act for breaches of employment laws.

Will be Act apply to offences that took place before 1 July 2021?

The Act does not apply retrospectively, so it does not cover breaches that occurred before 1 July 2021. However, entitlements accrued before 1 July 2021 (e.g. leave entitlements) will be captured if an employer’s dishonest conduct in withholding those entitlements occurs on or after 1 July 2021.

What record-keeping obligations are imposed the Act?

The Act does not impose new or additional record-keeping obligations. The Fair Work Act already requires employers to keep employee entitlement records and pay slips under sections 535 and 536. These obligations require an employer to keep employee record for seven years. The Act makes it a crime to deliberately falsify or fail to keep these records in order to gain a financial advantage or prevent the exposure of a financial advantage.

What penalties are imposed by the Act?

A fine of up to AUD 198,264 or 10 years jail for individuals, and a fine of up to AUD 991,320 for businesses.

Does this only apply to our employees in Victoria?

Not necessarily. While the Act primarily applies to employees who are wholly based in Victoria, it can also apply to other circumstances where the employee is performing services in Victoria and another jurisdiction or wholly overseas (although certain criteria must be met in these circumstances).

How can we help?

It is important to ensure you are paying the correct wages and employee entitlements to your employees and are keeping records of such payments. We can assist you by:

  • helping you understand your obligations under the new Wage Theft Act 2020 (Vic).
  • ensuring you are complying with minimum rates of pay and entitlements, including under applicable modern awards or enterprise agreements.
  • assisting with compliance checks to ensure your employees’ payments and the correct documents are being retained.