Despite the fears of many, the various wage theft laws are unlikely to harm HR professionals. They’re designed to target the kinds of businesses that avoid HR.

Should HR be losing any sleep about the possibility of criminal prosecution due to the wage theft laws? 

On the one hand there have been a few recent developments. In the past year both Queensland and Victoria have passed legislation criminalising wage theft and introduced strict penalties, including possible imprisonment (the Victorian law comes into effect from 1 July this year and the Queensland law has been in effect since September last year). Just last week the Victorian Government announced it’s developing a “new fast-track model” in the Magistrates’ Court for victims of wage theft, putting aside $9.6 million for it in the recent budget. 

On the other hand, the Federal government’s plans for industrial relations transformation have been pretty much hollowed out, including its wage theft provisions. 

It’s not surprising considering they attracted bipartisan criticism. Business groups objected because they felt the Federal laws were onerous, targeted smaller and family-owned businesses and would be a cumbersome burden to put on the economy and businesses as they tried to rebound from the impacts of the pandemic. 

Unions objected because the Federal laws could have undermined the stronger state laws in Victoria and Queensland, and they’re hoping the other states and territories pass similar laws. 

What do those stronger laws do? Basically they mean that any business with a proper HR function doesn’t have to worry. However, before explaining why that is, it’s worth asking how we got here.

A reckoning or something else?

Wage theft picked up a lot of mainstream attention a few years ago, sparked by high profile cases at 7-11, in the hospitality, restaurant and retail industries, and with migrant workers. It became clear that the risk factors for wage theft included being young (so potentially being naive, and in a job and/or industry you’re not intending on staying in), and being a casual or migrant worker (having less control over your employment).

As the media sharpened its focus, and people and politicians became angrier, many started voicing fears that potential wage theft laws could have world-changing impacts (HRM wrote about it at the time). In particular, businesses feared that the complexity of Australia’s industrial relations regime would mean they could face severe fines and possible imprisonment for unintentional failings.

A 2019 report by the McKell Institute Victoria does a good job of showing how widespread the problem was. Averaging statistics from several sources, it found that between 45 and 76 per cent of all workers had experienced underpayment or have not been paid penalty rates, 58.23 per cent had been underpaid or not paid their superannuation, and 51 per cent had worked unpaid or underpaid overtime. 

But how much of this was ‘wage theft’ and how much was legal wage suppression or employment mistakes? It isn’t easy to make that call. 

For example, multiple underpayment headlines revealed business had not paid workers eye-watering sums. Was this wage theft? Depends on your definition. HRM wrote about how a mixture of complicated industrial relations laws, the breakdown of enterprise bargaining and poor transitions to new payment systems made even large companies vulnerable to systemic underpayment. 

So where did all the momentum of the wage theft movement go? Once it reached the various parliaments, it focused firmly on intentional behaviour, not mistakes or carelessness. In other words, for most businesses with HR, the risk of being charged with wage theft is very low.

Don’t be dodgy

It could have gone another way. The 2019 report by the McKell Institute Victoria, for example, argued that “State and Territory governments should amend their criminal codes to criminalise intentional, reckless or grossly negligent instances of wage theft”. 

However, while the Queensland and Victorian state laws might appear troubling because they make it easier to prosecute individuals and leadership for the behaviour of their company, they are very much targeted at intentional behaviour, not mistakes. 

The key part of the Queensland law resulted in an amendment to the criminal code regarding stealing, which requires “deliberate, intentional behaviour”. Given this, the level of negligence and recklessness a company demonstrated would likely need to be very egregious for a charge of wage theft to stick. For example, if it could be proven that a business became aware of systemic underpayment and made a decision to do nothing about it.

In Victoria, the law requires the employer to demonstrate “dishonesty”. While this is not a settled term in the law, most courts will likely interpret it as requiring intention.

Supporting this view, the law says it’s a defence if “before the alleged offence, the employer had exercised due diligence to pay or attribute the employee entitlements to the employee”. In other words, if the so-called ‘wage theft’ occurred after several instances of correct payment, you’ve got a solid justification that it was unintentional.

Basically, for businesses with an HR function, it’s highly unlikely the wage theft laws will cause much of a kerfuffle, because HR should already know what is and isn’t illegal and should be on the lookout for systemic issues in employee relations. In a circumstance where HR gets something wrong, documented attempts to remedy the situation would be a sturdy defence.

The dire situation

There is of course the possibility that things are as bad as they get. If you as an HR professional have done the work and noticed there is a problem in your organisation, there is the possibility of accessorial liability (this is also an issue outside of wage theft, albeit not a criminal one). 

In the circumstance that you have found evidence of underpayments, reported it to senior management, and they either do nothing or delay any response, it’s in your best interests to consider informing outside regulators (in the case of full scale wage theft that includes the police) and it might also be advisable to leave the organisation. See this article for more on accessorial liability considerations.

Takeaways

If you’re in Queensland and Victoria it is worth familiarising yourself with the laws if you specialise in industrial relations or payroll, as there are some small changes to rules and processes around payment, underpayment claims and employee representation.

However, broadly speaking, the lesson is simple. Perform due diligence, make sure all employees are being paid correctly, and stress to the leaders of the business about the importance of compliance. 

Ultimately, if you’re asking if anyone in HR should lose sleep about the possibility of accidentally finding yourself on the wrong side of wage theft laws due to a genuine mistake, the answer is no.

Want to learn more about your HR law obligations? AHRI’s short course, Introduction to HR law is designed to upskill your HR team so they can tackle various workplace challenges with confidence.

In response to an issue raised by a commenter, this article has been edited to include a section on more dire situations.