Criminalising wage non-compliance: Victoria’s Wage Theft Bill 2020 introduced to Parliament26 March 2020
On 18 March 2020, the Wage Theft Bill 2020 (Bill) was introduced to the Victorian Parliament. Under the proposed laws, employers who dishonestly withhold employee entitlements or authorise or permit others to do so, will face substantial financial penalties or up to 10 years’ imprisonment for individuals. The top three things employers need to know are:
- Three new criminal offences: the Bill proposes three new criminal offences relating to the withholding of employee entitlements, the falsification of employee records and the failure to keep employee entitlement records. If passed, the proposed offences will be introduced into the Crimes Act 1958 (Vic).
The proposed offence relating the withholding of employee entitlements requires an element of “dishonesty” to be established before an offence is committed. This means employers who honestly, but mistakenly, withhold a person’s employee entitlements will not have committed an offence. The Bill also proposes a “due diligence” defence. If an employer can establish that it exercised due diligence to pay the correct entitlements to the employee, no offence will have been committed.
- Big penalties: those found guilty of the proposed offences are liable for penalties of up to 10 years’ imprisonment and fines of up to $198,264 for individuals (including both individual employers and officers of employers within the Corporations Act 2001 (Cth) meaning). Fines of up to $991,320 will apply for body corporates. The fines will be indexed each year.
- Policing compliance: to enforce the new laws, the Victorian Government will establish a new regulatory body, the Wage Theft Inspectorate Victoria, whose inspectors will have the power to enter, search and seize documents from business premises where inspectors reasonably believe an employee entitlement offence has been committed.
Concerns have been raised that the proposed laws could face a constitutional challenge due to an inconsistency with the Fair Work Act 2009 (Cth), which currently already provides civil penalties for non-compliance with workplace laws.
We will provide further updates as the Bill progresses through Parliament.