Wage theft is the deliberate and dishonest underpayment of employees, including superannuation and other employee entitlements. It can also include falsifying pay records and the avoidance of keeping those records.

All types of business’ from universities, to franchises to high flying restaurateurs have either deliberately or recklessly underpaid staff. The problem is the employer keeps or retains the money—that part being the ‘theft’.

A 2019 report by PwC found that the underpayment of Australian workers’ entitlements was estimated at $1.35 billion per year. The modelling was based on Fair Work Ombudsman data and found that sectors most at risk included retail ($180 million). The report estimated that up to 13 per cent of the total Australian workforce was subject to wage theft.

Victoria

From 1 July 2020, under the Wage Theft Act 2020 it is a crime for an employer in Victoria to deliberately underpay employees or dishonestly withhold employee entitlements.

Victoria’s Andrews Government has appointed a former Fair Work Ombudsman executive as the inaugural commissioner for Wage Inspectorate Victoria. The Inspectorate became an independent statutory authority on July 1 with powers to investigate and prosecute wage theft.

The Inspectorate already promotes and enforces Victorian laws covering child employment, long service leave, and contractors in transport and forestry and will keep those roles as an independent body.

The Andrews Government allocated almost $10 million in last month’s State Budget to develop a new “fast track model” for hearing wage theft cases in the State’s Magistrates’ Court. The Budget also included $13.5 million over two years for education and enforcement of the wage theft laws.

These crimes are punishable by a fine of up to $218,088 or up to 10 years’ jail for individuals and a fine of up to $1,090,440 for companies.

Queensland

Queensland has also made wage theft a criminal offence. In September 2020, the state passed the Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020.

This act amends the Queensland Criminal Code definition of stealing to provide an offence against an employer who intentionally fails to make payment of wages or entitlements, when it becomes payable to their employees.

The amendments make stealing from an employee a special case of stealing, reflected by the harsher maximum penalty of 10 years imprisonment (compared to the maximum of five years imprisonment for a general stealing offence) for the new crime.

This is the same maximum penalty faced by a worker found to have stolen from their employer.

The amendments also add an aggravating circumstance to the offence of fraud where the offender is the employer of the victim. This offence carries a maximum penalty of 14 years, which is the same as the maximum penalty for an employee who commits fraud against their employer.

NSW

The NSW Government has flagged that it will legislate increased the penalties for employers that avoid their payroll tax obligations by engaging in wage theft.

The Government has announced that the new laws will serve as a major deterrent to the avoidance of payroll tax on unpaid wages or other practices associated with tax avoidance or minimisation.

The new legislation, including harsher penalties and naming taxpayers who have underpaid payroll tax on wages, sends a clear message to businesses—do the right thing by your employees and by the taxpayers of NSW.

The changes mean Revenue NSW can name taxpayers who have avoided payroll tax on underpaid wages and will also allow Revenue NSW to disclose information to the Commonwealth Fair Work Ombudsman to assist in its wage theft investigations.

Under the changes, the maximum penalties issued to offenders who lie to tax inspectors or make false records will be increased from $11,000 to $55,000, or $110,000 for repeat offenders.

Employers become liable for payroll tax when their total wages in NSW exceed $1.2 million in a financial year.

The NSW Government sees the Federal Government as being primarily responsible for industrial law in the private sector so it is unlikely to go as far as Victoria and Queensland.

Western Australia

To combat wage theft in Western Australia, Private Sector Labour Relations has developed a range of initiatives including education campaigns and resources to increase the communities’ awareness of employment rights and obligations.

Information hubs help WA employers and employees:

• understand which industrial relations system covers them;
• find the right information on pay rates, leave entitlements and employment conditions;
• resolve an alleged underpayment of wages or leave entitlements; and
• report wage theft anonymously.

Lessons

Make sure that you seek advice on updated rates of pay, changes to awards or changes to entitlements. If you don’t, you run the risk of penalties or even prison in serious cases.