Victorian Wage Theft Laws
On 1 July 2021 the Wage Theft Act 2020 (Vic) (the Act) came into effect bringing with it a list of offences in relation to employee entitlements and record keeping, breaches of which may lead to significant fines and even prison sentences.
How does the Act define an offence?
Pursuant to Part 2 of the Act, an employer, whether it be a company or individual, commits a criminal offence if it:
dishonestly withholds the whole or part of an employee entitlement owed by the employer to an employee, or authorises or permits, expressly or impliedly, another person to withhold the whole or part of an employee entitlement owed by the employer to an employee and that other person does so (section 6(1));
falsifies, or expressly or impliedly authorises or permits another person to falsify, an employee entitlement record in respect of an employee with a view to dishonestly obtaining a financial advantage for the employer or another person, or preventing the exposure of a financial advantage obtained by the employer or another person (section 7(2));
fail to keep (by either not making a record or by destroying, defacing or concealing a record), or expressly or impliedly authorise or permit another person to fail to keep, an employment entitlement record in respect of an employee with a view to dishonestly obtaining a financial advantage for the employer or another person or preventing the exposure of a financial advantage obtained by the employer or another person (section 8(1)).
An offence under the Act will involve deliberate and dishonest conduct (according to the standards of a reasonable person), as opposed to an honest mistake by an employer who exercises due diligence in the payment of wages and entitlements, taking reasonable steps according to the size and nature of the employer.
Employers should note that the Act also provides that when determining whether a breach has occurred, consent by or on behalf of the employee is irrelevant if it reduces the employee entitlement to less than the minimum amount or benefit required under the relevant laws. Essentially, this means that the parties cannot deviate from the base NES entitlement.
Falsification of records and employee entitlements
It is an offence under the Act for an employer or an officer of an employer to falsify a record of an employee entitlement.
According to section 7 of the Act, falsification of a record includes:
producing, making or copying a record that is misleading, false or deceptive in a material particular; and
altering a record in such a way that causes the record to be misleading, false or deceptive in a material particular; and
providing information that causes a record to be misleading, false or deceptive in a material particular.
It is also an offence under the Act for an employer or an officer of an employer to fail to keep a record of an employee entitlement.
Specifically, section 3 of the Act defines employee entitlements as 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 which includes wages or salary, allowances and gratuities, and the attribution of annual leave, long service leave, meal breaks and superannuation –
in accordance with the relevant laws, contracts and agreements; or
if the amount or benefit under a contract or agreement is less than the minimum amount or benefit required under the relevant laws, in accordance with the relevant laws; or
if the amount or benefit under a contract or agreement is more than the minimum amount or benefit under the relevant laws, in accordance with the contract or agreement that applies to the employee.
Fines and penalties
Employers need to be aware that the Act is punitive, and the monetary penalties are significant. Fines of up to $1,090,444 maybe imposed on companies, and $218,088 or up to 10 years’ jail for individuals, for breaching the Act. Liability may extend to officers of the employer (including for example CEOs, directors, office holders and partners) who may be prosecuted separately for breaches of the Act.
Importantly, the Act is not retrospective, meaning that it does not apply to offences prior to 1 July 2021.
Wage Inspectorate of Victoria
The Act also provided for the establishment of the Wage Inspectorate of Victoria, an independent statutory body which has the following functions, among others:
to inform and educate people in relation to their rights and obligations under the Act;
promote, monitor and enforce compliance with the Act;
investigate wage theft and prosecute offenders;
respond to reports and tip-offs about wage theft; and
develop and publish guidelines in relation to the Act.
Wage Inspectorate inspectors have significant powers relevant to the enforcement of the Act and investigation of potential breaches including the powers to enter premises (in certain circumstance without consent or a warrant), to require the production of documents, seize evidence, require an individual to provide evidence or information under oath or affirmation and to apply for and execute search warrants.
In the event the Wage Inspectorate considers that a breach of the Act has occurred, it has the power to issues formal warnings, accept an enforceable undertaking, bring criminal proceedings and referrer indictable matters to the Office of Public Prosecutions for criminal prosecution.
What should employers do?
Employers should conduct a thorough review of all employees to ensure each are classified correctly according to the relevant modern award or workplace agreement (if applicable) and to ensure that employees are receiving at least the minimum wage and entitlement due to them for their position according to their hours of work. In addition, if employees have the benefit of an employment contract which provides for benefits which are more favourable than those in an applicable modern award or workplace agreement, employers must ensure that employees are receiving those benefits.
Employers must also ensure that appropriate records are being kept in line with the Fair Work Act 2009 (Cth) and the Fair Work Regulations 2009 (Cth).
Harwood Andrews can assist employers with identifying the relevant industrial instrument and employee entitlements, conducting audits to ensure compliance and by representing an employer in an investigation by the Wage Inspectorate of Victoria, among others.
For further information please contact:
Jim Babalis
Special Counsel
T 03 5225 5205
E jbabalis@ha.legal
