Be Aware – New Wage Theft Laws Commencing in Victoria

Under the Wage Theft Act 2020 Employers, Directors and Officers could be held criminally liable for dishonest non-payment or underpayment of wages and other employee benefits, as well as for failing to keep records of employee entitlements.

While wage theft laws in Victoria are only now coming into force under the Act, underpayment cases are not new with George Calombaris’ restaurant empire, Woolworths and Wesfarmers among others all having been caught up in the wage theft epidemic.

What’s changing?

Prior to 1 July 2021, a business underpaying an employee may have found themselves investigated and prosecuted by the Fair Work Ombudsman, however, from 1 July a business may also be pursued by the Wage Inspectorate and subject to more severe penalties.

Underpayments can be claimed for the previous six years, and employees are still able to make a claim after the employment relationship ended.

This means Businesses, Directors and Officers are at risk of being criminally liable for several years.

What are the penalties?

If the business, its Directors, or Officers have committed an offence, penalties may be imposed, up to approximately $200,000 of fines for individuals, up to approximately $1 million for companies and/or up to 10 years’ jail time. External advisers and individuals who are complicit in committing these offences may also be liable.

What are the offences?

The offences under the Act are:

• Dishonestly withholding at least part of an employee entitlement or impliedly authorising or permitting another person to do so
• Falsifying an employee entitlement record to dishonestly obtain or cover up a financial advantage
• Failing to keep an employee entitlement record to dishonestly obtain or cover up a financial advantage

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 the Act.

Increases to the minimum wage

It’s a timely reminder that the Fair Work Commission has announced an increase to the minimum wage of 2.5%, to take effect on 1 July. By taking into account the 0.5 percentage point increase in the superannuation guarantee, the Commission said a 2.5% increase to the minimum wage was appropriate.

This amounts to $772.60 per week or $20.33 per hour (based on a 38-hour week for a full-time employee).

What’s next?

The best action to take is to be proactive and regularly review the Modern Awards that apply to your business, ensuring you follow all requirements, including minimum rates of pay, employee entitlements and ensuring you’re reviewing classification levels under the award. If you have identified an underpayment, ensure any back payment is made in a timely manner.

Every business must ensure they are meeting their obligations. This includes paying employees correctly and retaining and maintaining employee records.

Need advice? Contact your Morrows Adviser or Morrows Human Resources Advisory on 03 9690 5700