Wage underpayment

Articles Written by Ruveni Kelleher (Partner), Katelyn Iacono (Associate)
Image of two fingers holding a coin.

In recent years, investigations by the Fair Work Ombudsmen have revealed widespread, systematic underpayment of wages and other entitlements across the Australian employment landscape. In response, a number of state governments have introduced legislative reforms in attempt to combat wage underpayment.

In June 2020, Victoria introduced the Wage Theft Act 2020 (Vic) to criminalise employee underpayment. The Wage Theft Act created new offences relating to employee entitlements, including:

  • dishonestly withholding employee entitlements that are owed to an employee;
  • falsifying records in respect of an employee entitlement in order to dishonestly obtain a financial advantage for the employer or another person, or to prevent the exposure of a financial advantage that has been obtained; and
  • failing to keep required employee entitlement records with a view to dishonestly obtaining a financial advantage for the employer or another person, or to prevent the exposure of a financial advantage that has been obtained.

An officer of the company or the company itself may be found liable in these offences, and exposed to a fine of up to 6000 penalty units for a body corporate and a maximum of 10 years imprisonment for an individual. 

Queensland followed suit in September 2020, amending the Criminal Code 1899 (Qld) to recognise wage theft as a prosecutable offence and increasing the maximum penalty for employer wage theft to up to 10 years’ imprisonment. Wage theft is prosecuted as stealing, and occurs where a company wilfully or deliberately refrains from paying an employee, for example, for all hours worked, superannuation and penalty rates. An officer of the company or the company itself may be found liable in this offence.

The Tax Administration Amendment (Combating Wage Theft) Bill 2021, currently before New South Wales parliament, will introduce harsher penalties (of up to $110,000 or 2 years imprisonment, or both) and allow for taxpayers who have underpaid payroll tax on wages to be publically named and revealed to the Fair Work Ombudsman for the purpose of continued investigation.

While the Federal Government was slated to introduce a range of wage theft related reforms under the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021, the proposed changes were not included in the Bill as passed. The Federal Government indicated that it would continue to pursue wage theft reforms, however there has since been no further reform announced.

Our Dispute Resolution & Employment Practice Group is actively involved in assessing compliance with industrial instruments and legislation and class action risks, and we have significant experience in advising our clients and in defending claims regarding the underpayment of staff. We are also well-versed in building defensive strategies that may dissuade funders from investing in a case from the outset and have a range of strategies we can use to help you assess compliance for the purpose of potential underpayments and to head off or interrupt plaintiff claims.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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