Wage theft is more common than one may think, with a 2019 survey conducted by the Mckell Institute finding that 60 per cent of respondents had experienced it. The term wage theft refers to denial of wages or employee benefits that are rightfully owed to employees. It may include:

• Not paying an employee;
• Paying below the minimum wage;
• Deducting an employee’s pay without authorisation;
• Not paying annual leave or other paid entitlements;
• Not paying overtime.

At present there is no federal law against wage theft and as such, the criminalisation of wage theft is left up to state legislature.

Victoria has recently introduced new anti-wage theft laws, which came into effect on 1 July 2021. This article summarises the new laws and employer obligations.

What are the new laws?

Since 1 July 2021, under the Wage Theft Act, it has become a crime for employers in Victoria to:

• Deliberately underpay employees;
• Dishonestly withhold wages, superannuation or other employee entitlements;
• Falsify employee entitlement records to gain a financial advantage; and
• Avoid keeping employee entitlement records to gain a financial advantage.

These offences come with a fine of up to $218,088.00 or up to ten years imprisonment for individuals, and a fine of up to $1,090,440.00 for companies.

In order to receive these penalties, it must be proven that the wage theft eventuated through deliberate and dishonest conduct. If an employer makes an honest mistake and generally exercises due diligence in paying wages and entitlements, this would not be considered wage theft.

Who can be charged with these offences?

Employers and ‘officers’ of the employer can be held liable for wage theft offences. These may include directors, office holders, partners and any other people who may make substantial business decisions on behalf of the employer.

Are wage theft laws retrospective?

The newly formed Victorian Wage Inspectorate can only investigate alleged wage theft offences that occurred on or after 1 July 2021. However, entitlements that have been accrued before 1 July 2021 will be captured if the employer continues to dishonestly withhold those entitlements beyond 1 July 2021.

What if my employee signed a contract to receive less pay and other entitlements than they are entitled to by law?

As an employer, you are obligated to provide employees with at least the minimum pay and conditions that have been identified in the relevant modern award, workplace agreement, employment contract or legislation.

These prescribed pay rates cannot be overridden by a contract or by an agreement with the employee that provides for less beneficial entitlements. In other words, you cannot ‘contract out’ of employee’s entitlements.

What do I need to do?

You will need to make sure that you provide your employees with at least the minimum pay and conditions outlined in the relevant modern award, workplace agreement, contract of employment or legislation, and keep employee entitlement records.

If you find that you have underpaid an employee, notify the employee and confirm arrangements for backpay. Make sure that you keep up to date with future wage increases and maintain accurate and current employee records.

There are no new record keeping obligations imposed on employers by these laws, however it is now a crime to falsify these records or fail to keep them for the purposes of gaining a financial advantage or preventing the exposure of a financial advantage.

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