Large Australian companies, including Woolworths, Coles and Target along with other high profile businesses, have joined the growing list of employers who have been caught in underpayment scandals, seeing the topic of wage theft become a prominent one in the media this year.  In June, this prompted the Victorian Parliament to pass the Wage Theft Bill 2020 (Vic) (Act). The state was the first Australian jurisdiction to criminalise wage theft, and was shortly followed by the ACT.  Now, after an initial inquiry into wage theft in Queensland and recommendations from its final report, the Queensland Government has also followed suit and passed new legislation to criminalise wage theft.

The growing issue of wage theft is also high on the Fair Work Ombudsman’s target list, and combined with these new laws will see the most severe ramifications in history for businesses that don’t comply. This makes it more important than ever for employers to be vigilant in ensuring that their payroll systems are complying with fair work laws and industrial instruments.

Queensland new legislation

On September 9, 2020, the Queensland Government introduced the Criminal Code and Other Legislation (Wage Theft) Amendment Bill 2020 (Bill) to combat wage theft. As noted by the explanatory notes of the Act,  wage theft  affects 437,000 workers i n Queensland  and  costs them approximately $1.22 billion in wages and $1.12 billion in unpaid superannuation each year.

The Act explicitly includes wage theft as a criminal offence, amending the definition of stealing in the Criminal Code to include failures to pay an employee in relation to the “performance of work by an amount payable under legislation, an industrial instrument or agreement”.  The Act is intended to capture a broad range of payments such as:

• Unpaid hours or underpayment of hours
• Unpaid penalty rates
• Unreasonable deductions
• Unpaid superannuation
• Withholding entitlements
• Underpayment through intentionally misclassifying a worker including via a wrong award, wrong classification or by ‘sham contracting’ and the misuse of Australian Business Numbers
• Authorised deductions that have not been applied as agreed

Penalties for non-compliance

Employers found to be deliberately stealing from their workers will now face jail time under the new Act, which for the offence of stealing, provides that employers are liable to  imprisonment for 10 years , which reflects the length of imprisonment as provided in the Victorian Wage Theft Act. The new law also amends the penalty for fraud, meaning that where the offender is or was an employer of the victim they will be liable to  imprisonment for 14 years .

Queensland’s Industrial Relations Minister, Grace Grace,  said in a statement  that State’s Government was committed to protecting the rights of workers across Queensland, of which one in four are affected by wage theft. “Far too often and for far too long, the stories of wage theft and underpayment have continued unabated,” she said. “These new laws recognise that the current framework is not doing the job – something needs to change to stop rampant wage theft.”

“Stronger penalty and deterrence measures are needed for those who commit wage theft, particularly where it is deliberate and systematic and part of an employer’s business model.”

Commonwealth and other states

There is evidently a trend within state and territory legislatures to criminalise wage theft in order to tackle the problem of employers using underpayments to lower their operating costs. Not only have strong moves been made by Victoria, the ACT and now Queensland, but the WA Industrial Relations Minister has also introduced the Industrial Relations Legislation Amendment Bill 2020 (WA) in June, to create stronger compliance and enforcement provisions to address wage theft.

On a Commonwealth level, the Attorney General and Prime Minister have  both given indications  that a wage theft bill will be introduced soon, but is still yet to be tabled in Parliament. This continuing trend indicates it may only be a matter of time before wage theft is criminalised in all states and territories and at the Commonwealth level.

What can employers do to prepare?

Due to the complexity of modern industrial obligations, it is perhaps not surprising that payroll errors are made. And while the majority of underpayments are a result of administrative error or a shortcoming in the payroll system, rather than any deliberate attempt to underpay employees, penalties still apply.

It is crucial for employers to apply rigorous systems to ensure all employees are paid in line with modern awards, industrial agreements, superannuation and penalty rates. If you are concerned that there might be errors in your payroll system, or simply wish to have peace of mind, it can be useful to engage a third-party to complete a professional audit to ensure compliance. This provides employers with accurate information to establish the extent of any errors, and how to rectify them.

If you need assistance navigating salary clauses, modern awards and other salary considerations,  contact Bayside Group Workplace Relations  today to speak with our experienced team.