Wage Theft

The Wage Theft bill passed on 16 June 2020 by the Victorian parliament. Victoria is the first state in the country to pass laws that establish criminal penalties for employers who deliberately underpay or don’t pay their employees. It also criminalises offences such as fabricating employment records or dishonest failures to maintain accurate employment records.

The introduction of the bill raises a whole list of questions for employers. Questions like:

• Have I been following the right processes?
• Am I compliant?
• Am I paying employees correctly?

It has never been more critical than it is now that employers get it right. Over the last while, we have seen numerous business in the headlines for underpaying staff which leads to owing millions in back payments.

What we all agree on is that the Australian Employment law system is one of the most complex. This makes it hard for employers to ensure they remain compliant and meet their obligations. 

So what is Wage theft, and what does it mean for you?

The definition of wage theft, according to the Sydney Morning Herald, is the process where an employer pays an employee less than what they’re entitled to under the Fair Work Act. The theft can be in the form of wages, entitlements, penalty rates, superannuation etc. Offences like these are where an employer authorises, encourages or permits the conduct. Under these circumstances, employers can be prosecuted and face imprisonment under the Wage Theft Bill. A separate authority called The Wage Inspectorate Victoria will investigate the offences and enforce the law. The inspectorate will be able to obtain information and evidence to investigate the offences. 

When does the Victorian Wage Theft Bill commence?The Victorian Wage Theft Bill will commence 1 July 2021. 

What does the Wage Theft Bill propose to do?The Victorian Wage Theft Bill will apply to employers who falsify employee entitlement records or are dishonest with their employee records. It will be considered a criminal offence if an employer is found to be committing wage theft. 

They will be looking at fines up to $991,320 for companies and $198,264 for individuals. In addition to this, individuals can also face up to 10 years of imprisonment.  

How will it affect employers?Victoria is the first to introduce a bill like this with the other states possibly following suit. It is more important now than ever that businesses ensure they pay their employees according to the relevant award and ensure Fair Work compliance. 

The key takeaways are:

• Employers must keep detailed up to date records of all employees. Employee records are required to be kept for seven years, even if the employee has left. 
• The Wage Theft Bill will apply for employees who work in Victoria wholly. 
• It will also apply if the employer is based in Victoria, and the employee is based outside Victoria. 
• Employers and employees based outside Victoria will fall under this umbrella if their services are performed main in Victoria. 
• Regular compliance checks and audits will ensure employers pay the right rates as the Awards keep changing.

Get in touchThe information contained in this blog is general in nature. If you are unsure about how these changes apply to you, feel free to contact us at VeiraMal Consulting. Our HR consultants will be happy to conduct a pay audit to prepare your business for these changes.