Wage Theft Act 2020 (Vic) – Maintaining employment standards in Victoria
The new Wage Theft Act 2020 (Vic) will commence on 1st July 2021 and will introduce sweeping changes to employment law that business owners and employers should be aware of.
The new legislation has several objectives. Firstly, to make the theft or withholding of employee entitlements and/or the failure to keep adequate records, offences. Secondly, to establish the Wage Inspectorate Victoria (WIV) which will oversee the Act’s enforcement.
There will be significant penalties imposed against employers who choose to underpay their staff, including jail time, as well as employers who withhold entitlements dishonestly. Ultimately, employees must be protected against being exploited in the workplace.
What should employers be aware of?
Employers should take note of the new criminal offences, the substantial penalties that can be imposed and WIV’s authority.
New Offences include the dishonest withholding of employee entitlements, the falsification of employee entitlement records and a failure to keep updated employee entitlement records. Possible penalties include fines up to almost $200,000 for an individual and close to $1million for companies, as well as 10 years in prison. It is clear that the government aims to crack down on wage theft practises that have occurred in Victoria.
Inspectors from WIV will have the power to enter, search and seize documents relating to employee entitlement offences at premises where there is reasonable belief an offence has occurred.
Wage Theft Act 2020 (Vic) Key Terms
An employee entitlement means an amount payable by an employer to or in respect of an employee, or any other benefit payable or attributable by an employer to or in respect of an employee. Through the Wage Theft Act, it will be an offence should any employee entitlement not be paid. Common examples of an employee entitlement include wages, tips and annual leave.
These entitlements must be payable in accordance with all relevant laws, contracts and agreements between employer and employee. The payment must be the greater of that required by law – i.e. minimum wage – and that required within a contract or agreement.
A key difference in the Wage Theft Act 2020 (Vic) is that an employer must act ‘dishonestly’, and this is what separates it from the current Fair Work Act 2009 (Cth) and underpayment provisions currently active.
‘Dishonest’ is objectively measured and is compared to the standards of a reasonable person. Establishing dishonest intent is critical in these new guidelines, and means that employers who acted honestly, but mistakenly, will have not committed an offence. Even if the employee consented to the withholding of entitlement, the employer is still liable if it is under the relevant laws.
Authorisation from employer
Not only is an employer dishonestly withholding employee entitlements an offence, but also an employer authorising or permitting another person to do so is also an offence.
If authorisation was not given and employee entitlement theft occurred, then employers need to prove that they exercised due diligence to prevent authorisation or permission being given. If an employer fails to comply with the relevant regulatory bodies, then the employer did not exercise due diligence and can be issued a penalty.
Employee Entitlement Records
Records of employee entitlements must be kept honestly and legitimately. This is simply to prevent the concealment of employee entitlement theft and the possibility of loss of evidence should records not be kept at all.
Failure to keep or falsification of employee entitlement records
The failure to keep records is deemed just as dishonest as falsifying them. Any employer who fails to keep records with dishonest intent faces the same penalties as those that choose to falsify them.
The workplace environment and ‘culture’ often have an impact on the integrity of employers and employees alike. ‘Corporate culture’ involves the attitudes, policies, rules and overall conduct of an employer where the relevant intention can be formed. That intention being dishonesty. Corporate culture that harbors dishonest intentions regarding wage theft include not paying employees if they work beyond rostered hours at the employer’s request and unpaid internships that are not advertised as volunteering or vocational placements.
Body Corporate Liability
A body corporate (e.g. company) will be taken as accountable should an employer within the body corporate have committed an employee entitlement offence and can be prosecuted. The body corporate, like an employer, must prove that due diligence was exercised to prevent the commission of the employee entitlement offence.
There have been concerns raised that the proposed laws could face a constitutional challenge due to inconsistencies with the Fair Work Act 2009 (Cth), so it is a very much “watch this space” situation over the next 12 months. Obviously, no one should be partaking in such employee entitlement actions within their workplace, but if there is potential risk, then it’s important to maintain legitimate and substantial records of all company wages and entitlements. The maintenance of employment wage records should not be a daunting task regardless of your experience, and if it is, we are here to help. Note that it is important that you are aware of any applicable Award minimum rates, including ongoing increases, as happened on 1st July 2020.
If you are interested in what the Wage Theft Act 2020 (Vic) will aim to prevent, the following link summarises a landmark Federal Court case surrounding exploitation and underpayment of workers at Hero Sushi which was passed down in May this year:
For further information on wage theft and common legal issues within employment, please contact us at firstname.lastname@example.org or visit our website www.phsolicitor.com.au for news updates and information. If you do have questions surrounding your own employment, please do not hesitate to give us a call on 03 9642 0435.