Company directors to be liable under flagged wage theft laws

Goya Dmytryshchak

February 22, 2020

The Age

Company directors and senior management could be prosecuted for wage theft offences under a bill proposed by the state government.

The government will on Sunday release a consultation paper on its Wage Theft Bill 2020, which it says is tougher than flagged federal reforms.

Pressure to criminalise worker exploitation increased last July after George Calombaris’ restaurant empire reimbursed $7.8 million in staff underpayments and made a $200,000 “contrition payment” to the federal government.

The state bill follows the federal government releasing a discussion paper on its “reform options”.

A key difference of Victoria’s wage theft bill is a corporate liability model, meaning a company director could be held liable for the actions of a payroll officer – for example – and be prosecuted for offences they weren’t explicitly involved in.

“The bill will provide that implicit authorisation can be established by the existence of a corporate culture within the body corporate that directs, encourages, tolerates or leads to the relevant conduct being carried on,” the consultation paper states.

“If the body corporate is liable, criminal liability may also be attributed to corporate decision-makers unless the officer is able to demonstrate that they took reasonable precautions and exercised due diligence to prevent the conduct,” the consultation paper states.

“This attribution model and the consideration of a corporate culture will serve as a significant deterrent and is anticipated to lead to behavioural change.”

The bill would create three wage theft offences – theft of employee entitlements, falsification of an employee record and failure to keep an employee entitlement record.

Individuals and corporate decision-makers could be fined up to $198,264 and face up to 10 years’ jail and companies fined up to $991,320 for each offence.

Offences would be investigated and prosecuted by the Wage Inspectorate Victoria, with a dedicated criminal law enforcement arm.

Wage theft offences would not apply retrospectively.

Court costs would be lowered and processes simplified for civil claims up to $50,000.

A new definition of ‘dishonesty’ will also be a central feature of the bill, and won’t allow employers to argue that their employees consented to having entitlements withheld.

“‘Dishonesty’ for the purposes of the new wage theft offence will mean dishonest to the standards of a reasonable person,” the consultation paper states.

“An employee’s consent to the withholding of an entitlement will be irrelevant to determining the accused’s dishonesty.”

The bill covers more than just monetary payments, extending to entitlements such as superannuation and leave.

Victorian workplace safety minister Jill Hennessy said the state bill was tougher than the proposed federal reforms.

“The existing legal regime has failed to prevent the exploitation of Victorian workers by unscrupulous employers,” she said.

“This problem is systematic -that’s why our laws will apply beyond wages and include allowances, gratuities, superannuation and other accruals such as leave, as well as ensuring directors and officers are held to account.

“We are concerned that the Federal Government’s wage theft laws will just target mum-and-dad run businesses and let big bosses get away with no consequences – doing nothing to address the widespread nature of this problem.”

The Victorian bill states that it is not aimed at administrative errors and genuine mistakes but at criminalising behaviour that is dishonest and intended to deprive people of their entitlements.

The bill would enable prosecution of third parties complicit in offending, including head franchisors and businesses involved in supply chain contracting, “who intentionally contract at a price for services that they know will involve the commission of the wage theft offence”.

If a federal bill is passed, it would override a state bill.

Feedback on the consultation paper is invited until March 9.