By Brigitta Poulos

Laws punishing underpayment of employees – known as ‘wage theft’ – came into place in Victoria on 1 July, 2021 when it became a crime for an employer to dishonestly underpay employees or withhold their entitlements.

Now, the first business in Victoria, or in any state in Australia, has been charged with breaching the new Victorian wage theft laws.

Victorian restaurant Rehmat & Mehar Pty Ltd (trading as alpine restaurant The Macedon Lounge) as well as its owner have received 94 criminal charges in total.

It is alleged that Rehmat & Mehar Pty Ltd and its owner dishonestly withheld over $7,000 in employee entitlements, including wages, penalty rates and superannuation, from multiple young former staff members.

What’s at stake: individuals may receive a sentence of up to 10 years in jail under the Victorian Wage Theft Act (Act), and companies can face fines in excess of $1 million (currrently 6000 penalty units).

The matter has been listed for mention in the Broadmeadows Magistrates’ Court on 21 February 2023.

First case of its kind – but perhaps the first of many

This is the first time that stand-alone criminal wage theft charges have been laid under the Act.

However, 10 prosecutions have been instigated by the Wage Inspectorate since 1 July 2021, including matters against CommSec, NAB and BankWest.

The Inspectorate announced that it would increase compliance activities in the year ahead, after recovering $1 million in unpaid long service leave and assisting over 15,000 workers and businesses in only its first 12 months.

HR Assured offers a guide to what wage theft laws mean here.

Wage theft – how did we get here?

‘Wage theft’ can be a harsh label because a surprising number of underpayment claims arise where a business makes minor errors, often unintentionally, that can devastatingly compound when applied across multiple employees over several years, and when interest is added on to repayment orders.

For example, a mere $1/hr payroll mistake, if it impacts 1,000 employees over three years will lead to an approximate $6,000,000  underpayment. Such a small and innocent oversight can quickly turn into a publicised underpayment claim and reputational damage.

Common mistakes made by companies which lead to ‘wage theft’ can include:

  • Ignorance of specific changes to Awards – such as transitional rates, minimum wage increases, and changes to penalty rates.
  • Failing to properly implement changes to payroll rules when a new Award term or Enterprise Agreement has begun to operate.
  • A lack of consideration as to whether a pattern of work is that of a shift worker, or of a day worker with regular overtime.
  • Confusion as to the interpretation and/or interactions of Award or Enterprise Agreement terms.
  • Confusion as to which Award or Enterprise Agreement applies.
  • Employment contracts that are non-compliant with the Award or Enterprise Agreement – e.g. are penalties and overtime absorbed by a higher rate of pay, or are they separately payable?
  • Rostering beyond the Award or Enterprise Agreement span of hours to meet client needs, without properly satisfying Award or Enterprise Agreement facilitative provisions.

Begin protecting your business today with an HR compliance audit

It’s not uncommon for a business to make accounting mistakes which become wage theft, so the solution – before the Wage Inspectorate turns your business into a headline – is to get an HR compliance check carried out.

Today is a great day to organise this before any complaint is sent to the Fair Work Ombudsman, a union or the Wage Inspectorate. Front-footing pay concerns today will save huge amounts – not only financially but also in time and stress.

An HR audit is far more affordable than having in-house legal counsel and is service that’s included in an HR Assured subscription. When you partner with us, you’ll get a detailed compliance review of your business. Our expert auditor – normally a senior Workplace Relations Specialist – will uncover risks and threats to your business due to incomplete, incorrect or missing processes. We’ll find everything that could expose you to penalties for failing to comply with modern awards, EBAs, the Fair Work Act 2009 (Cth), and other governing legislation in Australia. You’ll get a comprehensive compliance report ranking all relevant issues by severity, and we’ll give you practical, step-by-step advice on how to fix problems before they escalate. As part of the audit, our workplace relations expert will review and amend any existing contracts and policy documents, and help create new contracts, policies and guides that are tailored to your business and unique situation.

HR audits are also a great way for us to get to know you and your business,  helps us deliver the support and technology you need, tailored to your unique situation, and gives you a chance to get to know us, to be on first-name terms with the people who’ll be looking out for you and your business, 24/7, every day of the year.

If your business isn’t ready to for a comprehensive HR audit, we’d like to offer you an HR Health Check valued at $750. You can learn more about the Health Check here.

Brigitta Poulos is a Workplace Relations Consultant at HR Assured who loves helping clients and businesses achieve excellent workplace compliance with their obligations and duties, and interpretation of relevant employment legislation and awards. She particularly enjoys researching and explaining new or ‘hot’ topics in the workplace relations and human resources fields to our clients.