Wage Theft

The article Wage Theft is written by Brittany Llewellyn, Associate, Doogue + George Defence Lawyers.

Brittany holds a Juris Doctor and Bachelor of Arts with Honours from the University of Melbourne. She is notably experienced in criminal cases related to sexual crimes, drug courts, and therapeutic jurisprudence.

Before becoming a part of Doogue + George, Brittany served as a Judge's Associate to his Honour Judge Higham and worked exclusively in the County Court's criminal division. She has also worked as a Research Assistant, volunteered extensively for various legal centres, and completed internships domestically and abroad.

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As of 1 July 2021, it is a criminal offence in Victoria to engage in wage theft offences. The wage theft provisions were introduced to support employee entitlements and capture the conduct of employers who are not adequately remunerating employees or otherwise failing to keep adequate records for the purpose of concealing underpayment.

The legislation establishing this scheme is the Wage Theft Act 2020 (Vic).¹

Offences

A number of offences are established by Part 2 of the Act. The offences seek to encapsulate conduct that is deliberate and dishonest. If actions of employers cannot be shown to be intentional, otherwise impugned conduct may not constitute a criminal offence. In particular, providing you are exercising reasonable measures to protect against error and due diligence in your business activities, honest mistakes will not be sufficient to establish offences under the Wage Theft Act.

The offences established by the scheme include:

• Section 6 – Underpaying workers or withholding their entitlements. This can include withholding wages, superannuation, or other benefits to which employees may be entitled. Deliberate and dishonest underpayment/withholding only will be subject to prosecution.
• Section 7 – Falsifying employee entitlement records to gain a financial advantage. Falsification can include production, copying or alteration of records.
• Section 8– Avoiding keeping employee entitlement records to gain a financial advantage.

Only conduct since July 2021 can be caught by these offences. Any conduct prior to that date is not capable of forming a criminal offence under the Wage Theft Act 2020 (Vic).

Dishonesty

What is “dishonest” in the scheme is judged by the standards of a “reasonable person”. Of note is the fact that where employee entitlements drop below the minimum that they are entitled to by law, employees’ consent to withholding of their entitlements will not affect the evaluation of whether conduct is dishonest.

Penalties

The penalties involved in wage theft offences are substantial:

• For individuals, a financial penalty of up to $218,088 or imprisonment of a maximum of 10 years; and
• For companies, a fine of up to $1,090,440.

Who is caught by the provisions?

Employer businesses and individuals, including “officers” of a corporate body are all caught by the legislation. The definition of “officer” may need to be interpreted in relation to the facts of your specific case, but broadly would be very likely to include directors, and other people of the organisation that are making significant decisions in relation to business activities. Partnerships and unincorporated entities are both also caught by the legislation.

Enforcement

The legislation establishes an enforcement body called the Wage Inspectorate Victoria.²

The Inspectorate has a number of powers including to investigate and prosecute matters or refer indictable (more serious) matters for prosecution by the Office of Public Prosecutions.

The inspectorate has coercive powers that include compelling production of documents and attendance. It can also apply for search warrants if it believes on reasonable grounds that a person may have committed an employee entitlement offence,³ or exercise a limited power of entry including searching seizing property without a warrant.⁴

What to do

Set up effective systems and processes for ensuring compliance
It is first important for employers to understand their obligations to pay entitlements, and the changes in those obligations over time. For example, any increases to the minimum wage occur regularly. Employers should have proper processes in place regarding record keeping and payments in relation to their employment activities.

Rectify any underpayment as soon as possible
If you think that you may have underpaid an employee, it is important to rectify that underpayment. The Fair Work Ombudsman has a useful step by step guide as to what to do to begin this process, available on their website.⁵

Where necessary, ensure that you consult an experienced criminal defence lawyer regarding any liability
If you wish to discuss this scheme and how it could apply to your business, please call (03) 9670 5111 for a free initial consultation regarding advice about the scheme and provisions, or otherwise representation in circumstances where an investigative body has become involved.

It is also important to know that if you have made an honest mistake, that was reasonable in your personal circumstances, then there may well be a defence available to any prosecution. An experienced criminal defence lawyer should be engaged to defend you under the legislation and to, if available, facilitate a pathway that does not involve a negative outcome.

As always, if you are accepting responsibility for offending, engaging a lawyer is essential to explain context and to ensure this is taken into consideration in court proceedings.

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_{[1] Wage Theft Act 2020 (Vic)
[2] https://www.vic.gov.au/wage-inspectorate-victoria
[3] See Wage Theft Act 2020 (Vic), s 44.
[4] See Wage Theft Act 2020 (Vic), s 40.
[5] https://www.fairwork.gov.au/workplace-problems/common-workplace-problems/i-think-ive-underpaid-my-employee}

Date Published: 19 October 2022