Employees are a crucial part of the structure and function of most businesses. Accordingly, businesses should ensure they are aware of any changes in employment law so that they can meet their legal obligations. On 1 July 2021, the Wage Theft Act 2020 (Vic) came into effect, making it a crime to engage in wage theft in Victoria, punishable by up to $218,088 in fines or 10 years’ jail for individuals. This article explains wage theft and the new laws to help you avoid committing a crime.
What is wage theft?
The new laws make wage theft a crime in Victoria. Wage theft means to:
- Deliberately underpay workers;
- Dishonestly withhold employee entitlements including wages; or
- Falsify or avoid keeping employee entitlement records to gain financial advantage.
Can I be charged under the new wage theft laws?
The new wage theft laws apply to employers and officers of employers. The definition of ‘officer’ is broad, but generally includes individuals who have key decision-making powers, such as:
- Business owners;
- Company directors;
- Officer holders; and
- Other people who have the capacity to affect the entity’s financial standing in a significant manner.
Who enforces the wage theft laws?
The wage theft laws are enforced by an independent body called Wage Inspectorate Victoria. Broadly, the body is responsible for:
- Informing and assisting employers and workers about their rights and obligations;
- Investigating reports and possible cases of wage theft; and
- Prosecuting wage theft offenders.
The investigatory powers of the Wage Inspectorate Victoria are broad, and include the power to:
- Enter premises;
- Obtain and seize evidence;
- Require a person to give evidence or answer questions; and
- Apply for and execute search warrants.
What are the penalties for breaching the wage theft laws?
Engaging in wage theft is punishable by up to $218,088 in fines or up to 10 years’ jail for individuals, and up to $1,090,440 in fines for companies.
Are the wage theft laws retrospective?
The wage theft laws are not retrospective, meaning they only apply to wage theft occurring on or after 1 July 2021. However, they will still apply to employee entitlements accrued before 1 July 2021 which are dishonestly withheld after this date.
What should I do now?
The new wage theft laws are a good reminder for businesses to review their employment processes and documents. It may be a good idea to:
- Check your relevant industry award and ensure that you are paying employees the correct rates and entitlements.
- Review your employment contracts to ensure you are complying with your contractual obligations to your employees.
- Read about the new industrial relations reforms which affect things like casual employment and flexible working arrangements.
- Talk to a legal professional to ensure you understand the new wage theft laws and your obligations as an employer.