Introduction of the Victorian Wage Theft Act 2020

By Chao Ni, Principal, and James Sanders, Associate

Background

On 16 June 2020, the Victorian Wage Theft Act 2020 (the Act) was passed by both houses of the Victorian Parliament.

The Act establishes new civil and criminal offences targeting employers who deliberately withhold (whether directly or indirectly) employee entitlements from employees and employers who falsify and/or fail to keep employee entitlement records.

Employers who make honest mistakes or who exercise due diligence in paying wages and employee entitlements are unlikely to be found to have committed offences under this new law.

What are the new offences?

Subsection 6(1) of the Act contains the offence of “wage theft”:

An employer must not dishonestly:

    1. withhold the whole or part of an employee entitlement owed by the employer to an employee; or

    2. authorise or permit, 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.

Subsection 7(1) of the Act contains the offence relating to falsification of employee records:

An employer must not falsify, or expressly or impliedly authorise or permit another person to falsify, an employee entitlement record in respect of an employee with a view to dishonestly:

    1. obtaining a financial advantage for the employer or another person; or

    2. preventing the exposure of a financial advantage obtained by the employer or another person.

Subsection 7(2) of the Act prohibits the same conduct relating to falsification of employee records with respect to officers of the employer.

Subsection 8(1) of the Act contains the offence of dishonestly failing to keep employee records:

An employer must not fail to keep, or expressly or impliedly authorise or permit another person to fail to keep, an employee entitlement record in respect of an employee with a view to dishonestly:

    1. obtaining a financial advantage for the employer or another person; or

    2. preventing the exposure of a financial advantage obtained by the employer or another person.

Subsection 8(2) of the Act prohibits the same conduct relating to dishonestly failing to keep employee records with respect to officers of the employer.

Are there any defences for the employer?

It is a defence to a charge for an offence of dishonestly withholding employee entitlements if the employer proves that, before the alleged offence, they had exercised due diligence to pay or attribute the employee entitlements to the employee.

It is intended that when exercising due diligence, an employer took reasonable steps that are reflective of the size and nature of the employer. A higher standard will be applied when considering what is reasonable for a large body corporate than for a small business. 

Note that the Act makes express reference that evidence of an employer failing to comply with the requirements of a regulator (e.g. Fair Work Ombudsman) will be taken as evidence that the employer had not taken all reasonable steps in exercising due diligence.

When will the Act commence?

The Act will commence on a day or days to be proclaimed, or on 1 July 2021, if not proclaimed before that date.

The commencement date is intended to allow for a reasonable implementation period for the establishment of the Wage Inspectorate Victoria of approximately 12 months from the estimated date of passage of the Bill.

What are the penalties for breaching the Act?

Any body corporate who is found guilty of an offence under the Act could face fines of up to 6000 penalty units ($991,320 for FY20/21). Any natural person who is found guilty of an offence under the Act could face up to 10 years of imprisonment.

What is the Wage Inspectorate Victoria?

The legislation will establish the Wage Inspectorate of Victoria as a statutory authority with powers to investigate and prosecute wage theft offences. Among other things, inspectors can exercise entry, search, and seizure powers. They can also require a person to answer questions or produce documents.

What should our business do to prepare for the commencement of the Act?

It is not altogether clear at this stage how these new laws (and the ensuing processes) may practically interact or overlap with existing Federal laws on employment relations. The Federal Morrison government has indicated that employment law reforms are on the agenda for February 2021, which could impact the practical operation of the Victorian Act.

One thing is clear, compliance with workplace laws is now more important than ever as an issue that employers must pro-actively address. Directors and officers of companies should pro-actively assess whether employees have been paid correctly in accordance with their applicable award, agreement and/or contract of employment and that accurate employee records are being kept and maintained.

For more information about this article, please contact our Employment Law team by email or on telephone +61 3 8540 0200.