New criminal penalties for wage theft in Victoria

Wage theft law in the spotlight 2 min read

In response to a number of recent, high-profile cases of underpayment by large companies, the Victorian parliament recently passed a law creating new criminal offences relating to the underpayment of employment entitlements and failures in record keeping. The law will come into effect on a date yet to be announced, but no later than 1 July 2021.

How does it affect you?

• Employers, directors and officers may be criminally liable for underpayments of wages and other employee benefits, as well as for failures to keep records of employee entitlements.
• The Wage Theft Bill 2020 (Vic) (Wage Theft Bill) has the potential to apply beyond Victoria to many businesses based in other Australian states and territories or outside Australia. Businesses with any operations in Victoria or that have employees performing services in Victoria (even on a temporary basis) should carefully consider whether the Wage Theft Bill will apply to them.

Key provisions of the Wage Theft Bill

• Dishonestly withholding employee entitlements arising under contracts, agreements and relevant law will be a criminal offence under the new law. It will also be a criminal offence to falsify or fail to keep records of employee entitlements with a view to dishonestly obtaining a financial advantage for the employer or another person (or to prevent the exposure of a financial advantage). These offences will attract a penalty of up to $991,320 for bodies corporate, or 10 years' imprisonment for individuals.
• Significantly, these offences can be established 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. Further, directors and officers may be separately prosecuted and face imprisonment for offences under the Wage Theft Bill, irrespective of whether the body corporate is also prosecuted.
• The Wage Theft Bill will apply where an employee performs services wholly within Victoria or where there is a sufficient nexus with Victoria, such as if the 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).
• The Wage Inspectorate Victoria will be responsible for investigating offences and enforcing the new law. To assist with these functions, the Inspectorate will have a number of new powers, including powers to compulsorily obtain information or evidence to determine whether an offence has been committed.

Given the nature of matters covered by the Wage Theft Bill, it is possible that employers dealing with underpayment issues within their business will face concurrent investigation by the Fair Work Ombudsman and by the Wage Inspectorate Victoria. The Wage Theft Bill has also been the subject of criticism by the Federal Industrial Relations Minister, Christian Porter, given it may overlap with national laws being proposed by the Federal Government to criminalise serious underpayment cases.