Wage theft is the practice by an employer to deliberately and dishonestly underpay or not pay its employee or staff wage entitlements, including superannuation payments. In Victoria, wage theft has a prescribed maximum penalty of 10 years imprisonment or up to a fine of over $200,000 for an individual. NSW does not yet have legislation that criminalises this specific practice.
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A Victorian business and its owner will be the first to face criminal wage theft charges, in any Australian jurisdiction.
Rehmat and Mehar Pty Ltd trading as ‘The Macedon Lounge’, a restaurant in Victoria’s Macedon Ranges, has been charged after allegedly withholding more than $7,000 in employee entitlements from four staff.
The Victorian Wage Inspectorate has filed 94 criminal charges in the Magistrates Court of Victoria against the business and its officer.
It will allege that, from July to November 2021, the business dishonestly withheld wages, penalty rates and super from its former employees.
The four former staff were all young workers.
The matter will be next heard before Broadmeadows Magistrates Court on 21 February 2023.
“Victorians can be confident the Wage Inspectorate is doggedly investigating wage theft reports and intends to bring further appropriate matters before the courts.” stated Wage Inspectorate Commissioner, Robert Hortle.
Hurtle confirmed that the Wage Inspectorate has been: “investigating complaints, interviewing witnesses and exercising our coercive powers.”
Whilst civil remedies are available across Australia, Victoria has the only stand-alone criminal wage theft laws in Australia.
The legislation was introduced in July 2021 by the Andrews Labor government on the basis that existing civil penalty fines were not a sufficient deterrent.
Below is a general outline by our white collar crime lawyers as to the law on wage theft.
Wage Theft Australia
Wage theft in NSW does not have legislation that criminalises the dishonest practice like Victoria does. Wage theft can take many forms from withholding an employee’s entitlements such as superannuation payments to underpayment or non-payment of wages.
Honest mistake or delay in underpayment or non-payment of wages does not amount to wage theft. In New South Wales, while there is no legislative framework for criminal prosecution, other legislative instruments under the Crimes Act, including section 192E Crimes Act 1900, namely, the offence of obtaining benefit by deception and dishonesty.
What is Wage Theft?
Wage theft is the deliberate and dishonest exploitation by way of non-payment or underpayment of an employee wages by an employer. This includes employee entitlements including superannuation payments.
Wage Theft Victoria
The Victorian Wage Theft Act 2020 (Wage Theft Act) makes it a crime for employers to dishonestly underpay employees as well as withhold super or other employee entitlements.
It specifies that an employee providing consent to the withholding is not a defence, where the withholding reduces their entitlement to less than the minimum amount or benefit required under law.
It also criminalises falsifying employee entitlement records to gain a financial advantage, as well as avoiding keeping employment records in order to gain a financial advantage.
Under the Act, wage theft offences are specified to involve deliberate and dishonest conduct and are not aimed at criminalising ‘honest mistakes’ made by employers.
A maximum penalty of 10 years imprisonment or a fine of $221,904 is applicable for individuals, whereas a fine of $1,109,520 (6,000 penalty units x current value of $184.92) is applicable for companies.
Wage theft is a type of white collar crime.
Here is more on the difference between white collar and corporate crime.
The Albanese government had made a pre-election promise to criminalise wage theft, however, this has not materialised into any suggested legislation as of yet.
“Wage theft rips more than $1 billion off Australian workers each year. The Morrison government doesn’t think it’s a problem, but Labor does, and we will make wage theft a crime at a national level.” explained the now Prime Minister, in the lead up to the election.
Recent studies have illustrated that wage theft is a broad-scale problem.
A Senate committee inquiry into wage theft from March 2022 noted how: “wage theft practices have become widespread in the hospitality, retail, horticulture, franchise-heavy and higher education sectors.”
Those identified as most vulnerable to experiencing wage theft include migrants on temporary visas, non-unionised employees, young people, and those employed on a casual basis.
This can be attributed to how those in insecure work or that which is considered ‘low-skilled’, where there is often a strong labour supply, are vulnerable to exploitation.
The Senate inquiry recommended that any form of remuneration theft should be reflected at the federal level so that it would apply across all States and Territories of Australia via the Fair Work Act 2009 (Cth) as a criminal offence.
It noted that criminalisation could elevate awareness of the issue and provide a further form of deterrence to employers, as well as redress to those affected.
Wage Theft Queensland
Wage theft in Queensland is a crime. Employers who practice in wage theft in Queensland face up to 10 years imprisonment. In addition, employees who are victims of wage theft in the state can recover their unpaid wages through a simple process.
Claims to recover stolen wages against employers can be facilitated through the Industrial Magistrates Court via the Queensland Industrial Relations Commission Registry. Such claims by employees may be made within 6 years of when the employee was underpaid.
Underpayment or non-payment of wages due to an honest mistake or delay by an employer cannot amount to criminal prosecution.
In Queensland, a criminal report against an employer for wage theft can be made if there is proof that the employer intentionally withheld an employee’s entitlements with the intent to permanently deprive the worker of it.
Wage Theft Cases Australia
Other than the Woolworths wage theft case, a recent high-profile ‘wage theft’ case includes that of celebrity chef, George Calombaris who was forced to pay staff more than $7.8 million in owed underpayments.
Calombaris also had to pay a $200,000 civil fine following a deal with the Fair Work Ombudsman.
Major non-compliance with minimum payment standards has also been publicised in incidents related to companies such as 7-Eleven, Pizza Hut, Domino’s, Bunnings, Coles, and Woolworths.
Woolworths Wage Theft
It is reported that in early 2022 Woolworths faced a new fair work investigation when it was revealed that its wage theft claim went over $571 million attributed from underpayments to its employees.
A further $144m of underpayments were discovered, which the retail claimed was caused about from payroll errors.
These figures were revealed following a payroll systems review.
Woolworths, in a statement, responded by saying that errors were discovered in how workers were paid when they took multiples days off in a roster cycle. Long service rules were also applied incorrectly across various states and territories.
The underpayments were first discovered in 2019, by which time Woolworths estimated its wage theft estimate was about $200-$300 million. It’s since reviewed that number since more evidence has emerged.
By Poppy Morandin and Jimmy Singh.