Wage theft offence to be introduced and underpayment penalties to increase

As has been widely reported, the Morrison Government is set to introduce its IR reform Bill later this week.

The IR Minister (Christian Porter MP) has announced that to combat underpayments, the Government’s Bill will introduce a criminal offence of wage theft. The offence:

• will apply to national system employers who dishonestly engage in a deliberate and systematic patterns of underpayment;
• will not apply to inadvertent mistakes or miscalculations;
• will carry a maximum penalty of $1.11 million and imprisonment for up to 4 years for individuals and fines of up to $5.5 million for corporations.

The Government has also announced that the Bill will:

• increase the maximum penalties for ‘ordinary’ underpayments from $13,320 to $19,980 for individuals per contravention, while penalties for corporations (including small businesses), will increase from $66,600 to $99,900 per contravention;
• introduce penalties for larger corporations, which will be based on two times the benefit obtained or a $99,900 fine (whichever is higher);
• introduce penalties for serious underpayments by larger corporations, which will be based on three times the benefit obtained or a $666,600 fine; and
• increase infringement notice fines, penalties for sham contracting and penalties for failing to comply with compliance notices issued by the Fair Work Ombudsman by 50%.

Employers are encouraged to review the entitlements provided by the National Employment Standards, modern awards, enterprise agreements and contracts of employment to ensure compliance and to minimise the risks of underpayments.

EMA Legal can assist employers with any concerns they may have regarding employee entitlements and potential underpayments.