The Victorian Government recently passed legislation which targets employers who dishonestly withhold wages, superannuation and other employee entitlements.
Come 1 July 2021 (the date that the Wage Theft Bill 2020 (Vic) (Bill) comes into force), corporate Victorian employers who contravene the Bill will be liable for penalties of up to $991,320. Individual officers (i.e. directors, partners, office holders or persons who make decisions that affect a substantial part of the business) face individual liability for penalties of up to $198,264 or up to 10 years' jail time.
An employer is taken to have 'withheld' the relevant amounts where, among other things, they fail to pay the amount (i.e. such as unpaid internships), make an unlawful deduction, require payment of an unlawful fee or other charge or engage an employee under a sham contracting arrangement.
Employers also face liability under the Bill for dishonestly failing to keep employment records or falsifying employee records.
Interestingly, the Bill creates a "Wage Inspectorate", which will have its own investigative branch, similar to the Fair Work Ombudsman (FWO). For this reason, and given the significant overlap with proposed laws by the Morrison Federal Government introducing a criminal offence for significant underpayments, the Bill has faced criticism.
Given the length of time that will transpire before the Bill becomes law, we expect there to be more movement in this space, whether it be the introduction of federal law or a challenge of the Bill. Regardless of this, it is important that employers are aware of the Bill and the penalties involved.
If you require further information or have any queries in relation to this legal update, please contact a member of our Employment team.
We would like to acknowledge the contribution of Grant Klemm to this article.