The first criminal charges relating to wage theft have been laid by the Wage Inspectorate Victoria (WIV), marking a significant point in the fight against employee underpayments.
Victoria has been leading the way in fighting so-called ‘wage theft’ and increasing the significance of the consequences of being caught. In this case, it is alleged the employers withheld over $7,000 in wages, penalty rates and superannuation from four vulnerable employees. The two owners of the business are facing 47 charges each and under the Victorian wage theft laws, individuals can be sentenced to up to 10 years in jail and companies can face fines in excess of $1 million.
What does this mean for businesses?
In the past, the main response from government or regulatory bodies in cases of wage theft had been recouping the employees’ lost wages and fining the offending organisation. Whilst these measures are effective in impacting the financial viability and reputation of a business, they didn’t have the same impact on the individuals in the organisation. In most states, this is still the case, although there is a high chance in coming years that this will change in specific states or even across the country, assuming new wage theft laws are also implemented federally.
With these wage theft laws, individuals who are the cause of the underpayments can face criminal charges, separate from those against the business or organisation they work for. This dramatically increases the stakes of underpaying employees for the individual, and ideally will reduce the likelihood of these deliberate underpayments occurring.
Wage Theft Laws
Currently, wage theft is only a crime in Queensland and Victoria. However, it has been acknowledged as an issue by most states and territories, so it is expected in the future that more laws will be passed. Other states have also passed laws related to wage theft, however they don’t go as far as to make it a criminal offence. Some of these include:
- WA – introduced the Industrial Relations Legislation Amendment Bill 2021 (WA) which did not make wage theft a criminal offence but provided more protections to employees.
- ACT – the Courts (Fair Work and Work Safety) Act 2019 to provide a simpler, fairer and less expensive system for employees and unions to hold employers, who have stolen wages, accountable.
- NSW – introduced the Tax Administration Amendment (Combating Wage Theft) Bill 2021 which provides measures to deter employers underpaying employees by increasing penalties under payroll tax laws.
Interestingly, in the IR Reforms that have recently been passed, the criminalisation of wage theft was omitted. However, there is still a very good chance that these laws will be brought in the near future with other anticipated changes and reforms the Federal Labor Government has been promoting.
Our Payroll Audit Services
If you are concerned whether you may be inadvertently underpaying your employees, a payroll audit could be something very beneficial to your business – as well as protecting yourself as an individual. We can cheaply and efficiently audit a sample period of your payroll, similar to what the Wage Inspectorate Victoria or the Fair Work Ombudsmen would do, and identify any underpayments and their underlying causes, which might then trigger further investigation and remedial actions.
Click here to find out more about our payroll audit service.
