Be very afraid of wage theft
Starting 1 January 2025, Fair Work Legislation Amendment (Closing Loopholes) Act 2023 will come into force, introducing criminal penalties for wage theft.
In recent class actions, employers proven to have intentionally underpaid or withheld employee wages and entitlements may face up to 10 years in prison and fines reaching $1.5 million for individuals or $7.8 million for corporations. This represents a significant shift in wage theft enforcement from civil to criminal penalties, creating a strong deterrent and aligning federal policies with existing state laws in Queensland. This is not a new concept as it is already a criminal offence in Victoria. This will however unify the rest of Australia.
The legislation specifically targets deliberate underpayment, while isolated or unintentional errors, if quickly corrected, will not typically be prosecuted as wage theft. The legislation differentiates between inadvertent payroll errors (considered unintentional underpayments) and wage theft, which requires clear evidence that the employer acted with intent to shortchange employees.
Practices can become unstuck if they think there may be a mistake with payroll and do not follow up or seek a second opinion or if an employee comes to them with concerns about their payslip and no action is taken. Negligent actions in these circumstances can lead to wage theft accusations or back payments to staff with additional hefty fines. Small businesses that proactively comply with the upcoming Voluntary Small Business Wage Compliance Code may avoid prosecution and can seek cooperation agreements with the Fair Work Ombudsmen by self-reporting any violations.
Further information relating to the Voluntary Small Business Wage Compliance Code will be in subsequent WR News and PMA News articles.
Practice owners, managers and payroll services need to be aware of the appropriate and relevant penalties applicable to their practice staff in accordance with their relevant award. This includes understanding when overtime, penalty rates or allowances should be paid. The low-risk operating position is to keep in mind that employees should remain better off overall in any arrangement or agreement made between the employee and the practice. This will help reduce the chances of underpayments occurring.
Enhanced investigative powers for the Fair Work Ombudsmen, including collaboration with law enforcement are also part of the act to bolster enforcement capabilities and deter non-compliance across industries.
This reform, part of the government’s broader efforts to improve job security and employee protections, underscores a zero-tolerance approach to wage theft which aims to bolster employee’s rights and deter intentional exploitation in the workplace. In relation to employers not complying with workplace laws, Mr Patrick Turner (Employment Lawyer with Maurice Blackburn) has been quoted by ABC News to say “It just reflects the need to treat wage theft just as seriously as we currently treat theft by employees and there needs to be criminal penalties for people who deliberately underpay their staff”.
Months after NSW Health reached a $230 million settlement and the ACT Government reached a $31.5 million settlement in similar cases, the Federal Court has found a Victorian Health Service took a “highly irresponsible attitude” towards its obligations regarding the payment of unrostered overtime to junior doctors.
Lawyers involved in wage theft class actions on behalf of thousands of junior doctors says Victorian public health services may face millions of dollars in fines after a court found one of them “expressly and brazenly” instructed trainees to perform unpaid overtime.
Gordon Legal and Hayden Stephens and Associates, the law firms representing ASMOF and Junior Doctors in the unpaid overtime cases say “once the penalties are assessed for the thousands of junior doctors across the state, penalties may run into tens of millions of dollars”.
ASMOF & Anor v Peninsula Health VID115/2021
The above cases are a demonstration of what is happening in the public hospital space, for private practice queries contact AMA Queensland’s Workplace Relations Team who have essential expertise in helping private practice prevent and understand wage-related incidences occurring. We can be contacted on 07 3872 2264 or through email support at workplacerelations@amaq.com.au