Ben Schneiders and Nick Bonyhady
June 17, 2020
The Age
Wage theft will become a crime in Victoria after the state’s upper house passed Australia’s first legislation making deliberate underpayment of workers a criminal offence.
The legislation was passed late on Tuesday night with crossbench support, despite opposition from the Coalition parties, setting the stage for a stoush with employers and the federal government who have warned Victoria’s approach could be unconstitutional and confusing.
The Victorian laws include fines of up to almost $1 million dollars for businesses and up to 10 years jail for offending employers, with a team of new inspectors empowered to police the laws.
Victoria’s Attorney-General Jill Hennessy said workers now “have the law on their side”. She said existing laws had failed to stop the problem, making a criminal approach necessary.
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“No worker should have to stand on their own when it comes to being exploited by their bosses,” she said. “A fair day’s pay for a fair day’s work isn’t a negotiable extra.”
Trades Hall secretary Luke Hilakari said on Tuesday night that the laws would “forever improve the lives of workers and their families”.
The new laws do not come into effect until mid-2021, in a bid to give businesses time to prepare, but employer groups are concerned the laws duplicate the federal system.
The federal Fair Work Ombudsman already regulates the same terrain but without the threat of prison time.
The Morrison government is developing its own laws criminalising wage theft through a working group under Attorney-General Christian Porter and has signalled Victoria’s laws might be open to a constitutional challenge.
“It is totally unnecessary for the Andrews government to rush into this ill-conceived venture,” Mr Porter said.
Victorian employers wanting to self-report staff underpayments would now probably have to deal with both state and federal agencies, University of Melbourne labour law expert Professor John Howe said.
Melissa Kennedy, a PhD scholar working under Professor Howe, said there was a risk business owners would be less likely to come forward once the Victorian scheme was in effect because they faced being prosecuted at both a state and federal level.
She said the Fair Work Ombudsman tended to prioritise the repayment of workers, reducing penalties for business owners who self-reported errors and co-operated with investigations.
“Whereas with the Victorian scheme, it prioritises the punishment angle rather than repayments,” Ms Kennedy said. Research showed the number of claims pursued by authorities tended to be a stronger deterrent than the severity of punishments, she said.
Peter Strong, chief executive of lobby group Council of Small Business Organisations of Australia, said there was a “real risk” of people being prosecuted multiple times.
Mr Strong said criminalising only the most egregious cases of wage theft at a federal level was a more sensible approach. “The people who do true wage theft, go get them, they’re giving us all a bad name and they’re wrong,” he said.
In recent years some of Australia’s largest companies have been embroiled in major scandals over the underpayment of workers.
Investigations by The Age have exposed underpayments at dozens of businesses including at 7-Eleven, McDonald’s, Coles, at large franchises, high profile restaurants and on farms. Fair Work Ombudsman surveys have shown around half of all hospitality businesses are non-compliant with labour laws.
Professional services firm PwC has estimated 13 per cent of Australian workers are underpaid a total of $1.35 billion a year.
The new Victorian Wage Inspectorate will have strong powers including rights to enter premises to obtain information and seize evidence and to apply for and execute search warrants. The inspectorate will also target employers who falsify wage records, or dishonestly fail to keep records in a bid to hide wage underpayments.
Ms Hennessy paid tribute to campaigners including Young Workers Centre director Felicity Sowerbutts for their role in highlighting the impact of wage theft.
“The existing legal regime has failed to prevent the exploitation of Victorian workers by unscrupulous employers,” Ms Hennessy said.
The Victorian inspectorate will be allowed to coordinate with its federal counterpart but no formal arrangement has been established.
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