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As of 1 July 2021, it is a criminal offence for a Victorian employer to deliberately underpay employees or dishonestly withhold employee entitlements.
The punishment for committing this crime is a fine of up to $218,088 or 10 years jail time for individuals and a fine of $1,090,440 for companies.
It is imperative to your business’ finances and reputation that you do not engage in wage theft.
Understanding your obligations as an employer under the Wage Theft Act 2020 (VIC) is a must.
As a result, it is best practice to review your employment contracts and documents (such as industry awards) regularly.
Let’s break it down.
First Up, What Is Wage Theft?
Put simply, wage theft is the underpayment of employees.
Wage theft occurs when an employer fails to pay their employee the correct wage that is rightfully owed to the employee.
For example, if an employer fails to pay an employee overtime, this is considered wage theft. It is also considered wage theft when an employer fails to pay their employee the minimum wage.
The unfortunate truth is that wage theft is a serious and prominent issue in Australia with large companies such as 7-Eleven, Caltex and Domino’s Pizza being found guilty of engaging in this behaviour.
The Victorian Government has taken this widespread issue very seriously by introducing the Wage Theft Act 2020 (VIC). Let’s break it down.
Wage Theft Act 2020 (VIC)
The Wage Theft Act 2020 (VIC) makes it a crime for employers to:
1. Deliberately Underpay Employees
This means that if an employer is knowingly and purposely withholding an employee’s wage, they will be committing the crime of wage theft.
It is important to note here that if you have made an honest mistake that has consequently led you to accidentally underpay your employee, this will not be considered wage theft.
(More on the importance of exercising your due diligence as an employer in a bit).
2. Dishonestly Withhold Wages, Superannuation Or Other Employee Entitlements
If you dishonestly withhold an employee’s wage, superannuation or other entitlements such as annual leave or sick leave, you will be committing a criminal offence.
3. Falsify Employee Entitlement Records To Gain A Financial Advantage
Examples include falsifying payslips, superannuation payments and other employee entitlements.
4. Avoid Keeping Employee Entitlement Records To Gain A Financial Advantage
Examples include not keeping a record of the hours that your employee works.
In the event that you commit any of the crimes listed above, you will face hefty fines and possible jail time under the Wage Theft Act 2020 (VIC).
Specifically, individuals who are found guilty of committing wage theft will be liable to pay fines up to $218,088 or 10 years jail time. Equally, if a company is found guilty of this crime, they will face fines up to $1,090,440.
These new laws are serious and carry hefty penalties if you or your business engage in wage theft. It is vital that as a business owner, you are across these laws and understand the ramifications of committing wage theft.
When Do The New Laws Come Into Effect?
The Wage Theft Act 2020 (VIC) came into effect on 1 July 2021.
This means that any crime listed above that is committed on or from 1 July 2021, is punishable under the Act.
The Wage Theft Act 2020 (VIC) does not apply in retrospect. What this means is that only crimes of wage theft committed on or after 1 July 2021 can be investigated.
What Is My Employee Entitled To?
The Wage Theft Act 2020 (VIC) states that an employee is entitled to pay and benefits that may include:
- A wage or salary
- Allowances and gratuities
- Annual leave
- Long service leave
- Meal breaks
- Superannuation
Exactly what your employee is entitled to will depend on their type of employment and what industry your business operates in.
For example, your employee’s entitlements will vary based on whether they are a casual or permanent employee. Similarly, your employee’s entitlements will vary based on what industry they are employed in. For instance, most industries have an award or registered agreement that details everything that your employee is entitled to.
At a minimum, your employee is entitled to the national minimum wage. Equally, your employee is entitled to be treated with respect and not exploited through the means of wage theft.
Understanding what your employee is entitled to can be complex. However, it is absolutely necessary to ensure that you understand your employees entitlements to confirm you are not committing wage theft.
You must exercise your due diligence as an employer effectively. To figure out whether a specific award applies to your industry, click here.
To learn the differences between different types of employment and their entitlements, click here.
What If The Contract States That I Can Pay My Employee Less?
A contract that does not adhere to the relevant award, registered agreement or national minimum wage will be void.
Failing to pay your employee the correct pay that they are entitled to will be considered wage theft, even if you have a contract that stipulates that they agreed to the relevant terms and conditions.
As an employer, you are obligated to engage in fair and transparent employment contracts. Entering into a contract that allows you to pay your employee less than they are entitled to will be considered a crime under the Wage Theft Act 2020 (VIC).
What If I Have Previously Or Currently Underpay My Employees?
As the Wage Theft Act 2020 (VIC) came into effect on 1 July 2021, only wage theft crimes committed on or after this date may face criminal charges.
What this means is that if you have deliberately or dishonestly withheld your employees pay or entitlements since 1 July 2021, you may face criminal charges.
If you think that you have been underpaying your employees, it is pivotal that you report this to the Fair Work Ombudsman here. The Fair Work Ombudsman can assist you in rectifying this problem and potentially avoid hefty penalties under the Wage Theft Act 2020 (VIC).
I’m Being Investigated For Wage Theft, What Now?
If you are currently being investigated for wage theft, you can expect an independent, impartial and transparent investigation to take place.
The Wage Inspectorate Victoria is the governing body that will carry out the investigation.
The purpose of this investigation is to determine if you have been deliberately and dishonestly engaging in wage theft. The investigator assigned to your case will:
- Clearly explain the allegation made against you or your business
- Ask questions about the matter
- Ask for documents or other relevant information
- Such as payslips or employment contracts
- Give you the opportunity to respond to the allegations being investigated
The Wage Inspectorate Victoria has relatively strong powers that include the power to:
- Enter your business’s premises
- Obtain information and documents
- Gather and seize evidence
- Require a person to provide evidence or answer questions under oath and
- Apply for and execute search warrants.
If you or your business is being investigated, you must cooperate with the investigation.
Anything Else I Should Know?
Evidently, the new laws under the Wage Theft Act 2020 (VIC) are very serious.
Wage theft is a serious crime that will not be tolerated.
As a business owner, it is your responsibility to ensure you do not engage in wage theft. If you do, significant penalties will likely apply that can be both financially and reputationally detrimental to your business.
As a result, it may be best practice to review your employee contracts if you have not done so yet.
Understanding the laws around your employees entitlements and wage theft can be complex. We’re here to help!
Reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or 1800 730 61.
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