Failure to pay employees their proper entitlements could leave employers exposed to criminal charges (including jail time) under new laws introduced in Queensland.
Criminalisation of ‘wage theft’
The Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020 (Qld) introduces new provisions to the Criminal Code Act 1899 (Qld) expanding the definition of ‘stealing’ to include a failure to pay an employee (or other person on his or her behalf) an amount in relation to the performance of work by the employee.
The Explanatory Notes of the introducing Bill state that the provisions 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 the misuse of Australian Business Numbers; and
- authorised deductions that have not been applied as agreed.’
The penalty for an offence is imprisonment for a maximum of 10 years and, in the case of an employer committing fraud against an employee, a maximum term of 14 years.
The laws target deliberate ‘wage theft’ and are not intended to apply to employers who accidently underpay workers and subsequently rectify their mistake.
Background to the reforms
The Queensland Parliamentary Education, Employment and Small Business Committee’s report, ‘A fair day’s pay for a fair day’s work?’ (November 2018) notes that over 437,000 Queensland workers do not receive their full entitlements – at 5% loss in income per worker, this would equate to $1.22 billion in wages annually.
The report suggests that wage theft not only affects workers and their families but impacts other businesses and the economy overall through the underpayment of superannuation, annual reductions in consumer spending and federal tax revenue.
The reforms target employers who blatantly engage in wage theft, gaining an unfair advantage at the cost of employees and other competitors in the market.
Proposed streamlined processes for recovery of wages
The reforms will also amend the Industrial Relations Act 2016 (Qld) by introducing a simplified process for workers to make wage recovery and fair work claims to the value of $20,000 through the Industrial Magistrates Court.
The system will promote the low-cost and efficient resolution of claims by enabling the registrar to refer parties to conciliation before a matter is heard by a Court. Parties not wishing to participate in conciliation will need to promptly notify the registrar.
The purpose of conciliation will be to facilitate agreement between the parties, whether on all matters, or at least narrow the scope of unresolved issues. Once referred, conciliators will be required to commence the conciliation process as soon as practicable.
Employers should review wage systems
Rather than punish employers who have inadvertently made an error or oversight in calculating or paying employee wages, the laws target intentional conduct aimed at deliberately depriving workers of their full entitlements.
Workplace laws are constantly evolving, and employers should conduct regular checks to ensure compliance with relevant awards, industrial instruments, and employment contracts. All employees should be correctly classified and receive their full entitlements. Any underpayments should be flagged and rectified immediately, with processes implemented to foster ongoing checks and audits.
Employers should obtain professional advice if they are uncertain of their obligations.
Employees – recovering unpaid wages
Wage theft may cover a range of circumstances where full employee entitlements have not been met, for example, not being paid the minimum hourly rate of pay for the work carried out, the withholding of leave entitlements or a failure to make compulsory superannuation contributions.
Employees who believe they are not receiving the correct entitlements should raise these concerns with the appropriate person at their workplace. If unable to resolve the issue with the employer, employees can make a complaint to the Fair Work Ombudsman, the Australian Taxation Office, or pursue recovery of their entitlements through the Courts. We recommend obtaining legal advice before pursuing a matter in Court.
This article is intended to provide general information only. You should obtain professional advice before you undertake any course of action.
If you or someone you know wants more information or needs help or advice, please contact us on (07) 4724 1016 or email [email protected].