What is Wage theft
“Wage Theft” is the underpayment of wages or entitlements to an employee by an employer. Wage theft can include paying less than the minimum wage as mandated by the National Employment Standards, the Queensland Employment Standards, or relevant industrial instruments like an Award or an Enterprise Bargaining Agreement. Wage theft also includes not making required employer superannuation contributions, and withholding entitlements such as leave and penalty rates.
Why is it a crime?
Wage theft is a criminal offence in Queensland. The laws that came into effect from September 2020 through the passing of Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020 (Qld) (Wage Theft Act) widened the scope of “stealing” as defined under section 391 of the Criminal Code Act 1899 (Qld) (Criminal Code) to include “failure to pay an employee, or another person on behalf of the employee, an amount payable to the employee or other person in relation to the performance of work by the employee is a thing capable of being stolen.’’[1]
This act of “stealing” by an employer is even stricter in its application in that it provides for the stealing to be complete as and when the amount becomes payable to the employee, or to the other person on behalf of the employee, under an act, industrial instrument or agreement, and the amount is not paid.
In a nutshell, the Wage Theft Act Inserted Section 391(6A) into the Criminal Code to allow wage theft to be prosecuted as stealing, and inserted Section 398(16) to increase the maximum penalty for stealing by an employer to 10 years imprisonment (compared to the maximum of five years imprisonment for a general stealing offence).
An individual employer or a company can be charged with wage theft. A company director or senior officer can be liable for wage theft if it can be demonstrated they were an accessory to the commission of the offence. Employers found to be deliberately stealing from their workers can be prosecuted with a crime and sentenced to up to 10 years in jail.
To successfully charge an employer with stealing, the employer must be shown to have intentionally withheld an employee’s entitlements with an intention to deprive the worker of their wages.
What should Employers know and do?
Wages, that is an amount payable to an employee or other person, in relation to the performance of work by the employee, are intended to capture a broad range of payments and entitlements, including:
- unpaid hours or underpayment of hours;
- unpaid penalty rates;
- unreasonable deductions;
- unpaid superannuation;
- withholding entitlements;
- underpayment through intentionally misclassifying a worker including wrong award, wrong classification or by “sham contracting”; and
- authorised deductions that have not been applied as agreed.[2]
Wage theft is often accompanied by or facilitated by a failure to keep accurate records or give accurate pay slips. Underpayments are often only able to be identified and addressed through compliance action if adequate records are kept.
Employers have an obligation under the Fair Work Act 2009 (FW Act) under Section 535 and Section 536 and Industrial Relation Act 2016 (Qld) under Section 339 and Section 340 to ensure that the employment records which includes details such as hours worked by the employee during each day and week are retained accurately.
As part of its Secure Australian Jobs Plan, the Federal Government is proposing to legislate amendments to the FW Act to help curb the widespread problem of “wage theft”. The proposed reforms will have significant implications for directors of companies and businesses, including the exposure to criminal liability.
Employers should ensure that their workers are paid correctly under the relevant industrial instrument/s and formulate remuneration packages that take into consideration all relevant provisions that may apply to the employment of their workers. Employers should also review their employees contracts to ensure that the agreed outcomes with their employees do not provide, on balance, for less advantageous entitlements than those provided for in legislation and/or awards and/or enterprise agreements.
For any further information or assistance in ensuring your business is offering the correct contracts and entitlements, contact our Employment and Workplace Relations team here at MBA Lawyers. Call us today on 07 3211 8644.
[2] Criminal Code and Other Legislation (Wage Theft) Amendment Bill 2020 – Explanatory Notes, p.5.
[1] Section 391(6A) of the Criminal Code Act 1899 (Qld)