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New wage theft legislation

April 07, 2020

The Victorian government has introduced Wage Theft legislation into Parliament.  If passed this legislation will create criminal offences with a maximum penalty of 10 years jail to dishonestly underpay employees their employee entitlements and to falsify or deliberately fail to keep employee entitlement records.  The date when this offence can commence may be late as 1 July 2021 but the Bill provides for an earlier commencement date. 

Other features of the proposed offences are that:

  1. The definition of “employee entitlement” is very broad and includes allowances, superannuation and possibly portable long service leave.
  2. The definition of “employee entitlement” also seems to include above award agreements but may separate hourly rates from allowances.  This may expose employers who agree to an above award rate without properly allowing for all allowances and entitlements.
  3. The definition of “employee” will rely on the common law.  This means that it may be difficult for a business to be certain if a contractor could be an employer for the purpose of this new legislation.  This will be a major issue especially for labourers, contractors charging hourly or similar rates, and contractors who mainly work for the same business.
  4. It does not seem to be possible for an employee to consent to not being paid or consent to any withholding of an employment entitlement.  This applies even if the withholding is agreed temporarily as a response to a business crisis. 
  5. The concept of “dishonesty” for the new offences is not the same as dishonesty for most criminal offences.  Instead dishonesty is set according to the standards of a reasonable person.  This possibly makes poor business management skills no excuse for offending even when there was no intent to withhold payment of employee entitlements or not keep employee entitlement records.
  6. The corporate culture of an employer can be used to find an employer guilty of an offence. 

It is not clear how this legislation will work with the existing Commonwealth Fair Work Act that currently regulates employment in Victoria.  The establishment of the Wage Inspectorate Victoria and legislation giving it significant powers suggests that the Victorian government proposes to take a much more active role in the regulation of industrial relations.  

HIA will provide further information as it becomes available and it has a chance to assess the proposed legislation.