Wage theft in Victoria – A wake-up call for employers

A string of large national corporations have recently self-reported underpaying employees almost half a billion dollars. Woolworths Group was responsible for failing to pay over $300 million in entitlements. In response, the Victorian Government has recently enacted the Wage Theft Act 2020 (Vic). The Wage Theft Act 2020 (Vic) is expected to commence on 1 July 2021.

The Wage Theft Act 2020 (Vic) creates three primary offences:

1. Dishonestly withholding employee entitlements or allowing someone else to do so.
2. Falsification of employee entitlement records to obtain a financial advantage, including hiding the obtaining of a financial advantage.
3. Failing to keep an employee entitlement record to dishonestly obtain a financial advantage, including hiding the obtaining of a financial advantage.

Dishonesty within the Wage Theft Act 2020 (Vic) differs from the general Victorian theft offences. An employer will have behaved dishonestly if they are dishonest to the standard of a reasonable person. It is intended to capture employer actions on behalf of employers that are deliberately or recklessly dishonest. Importantly, these offences are not intended to capture honest mistakes and those employers who have exercised due diligence in paying employee entitlements.

If found guilty of these offences, a company may be liable for $991,320 in fines, or individuals may be sentenced to 10 years’ imprisonment. This means that Directors and other officers of the employer can have penalties imposed against them personally. The penalties could be applied to national and international companies as long as they have operations and employees in Victoria.

The Wage Theft Act 2020 (Vic) also establishes the Wage Inspectorate Victoria as an investigative body to investigate and prosecute the above offences. Wage Inspectorate Victoria will have powers to:

• Search and seize documents with a warrant;
• Enter premises with consent;
• Request evidence or production of documents; and
• Make recommendations to Victoria Police.

Victoria is the first state in Australia to enact such a regime – sending a wakeup call to employers that stealing the lawful entitlements of employees is not tolerated and they will face significant penalties.

If you have a query regarding underpayments, speaking to an employment lawyer is recommended.