Victoria has become the first state in the country to pass laws establishing criminal penalties for employers who deliberately underpay or don’t pay their workers.

Employers who dishonestly withhold wages, superannuation or other employee entitlements, will face fines of up to $198,264 for individuals, $991,320 for companies and up to 10 years’ jail.

Offences will also capture employers who falsify employee entitlement records, such as payroll records, or who fail to keep employment records.

New record keeping offences are aimed at employers who attempt to conceal wage theft by falsifying or failing to keep records. No longer will employers be able to avoid being held accountable through deliberate dishonest record keeping practices.

The Wage Inspectorate of Victoria will be established as a new statutory authority with powers to investigate and prosecute wage theft offences.

Employers who make honest mistakes or who exercise due diligence in paying wages and other employee entitlements will not be subject to the legislation.

The Victorian Government has also consulted with employer groups and unions, and in February this year released a consultation paper seeking public feedback on the proposed legislation.

It is now working on reforms to make it faster, cheaper and easier for employees to recover the money they are owed through the Magistrates’ Court.

AMMA’s position

AMMA position on underpayment penalties, aligned to that of the broader business community, is that introducing criminal sanctions into the industrial relations system is far from ideal.

It is clear from the large numbers of employers that self report underpayment of wages that a significant proportion of non-compliance is driven by Australia’s employment laws being unnecessarily complex, in particular the industrial awards system.

AMMA’s future vision for industrial relations in Australia, as detailed in A New Horizon: Guiding Principles for the Future of Work  includes a significantly simplified safety net that abolishes the awards system in favour of universal minimum standards of employment and adequate protections for those who may be in need.

Compliance and enforcement issues, including the possibility for criminalising serious underpayments in federal legislation, is one of five areas of Australia’s industrial relations system being closely examined by a series of Australian Government-led working groups. AMMA members are being represented in this discussion group by the Australian Chamber, of which AMMA is an association member and CEO Steve Knott is a Board Director.

See here for more information.