On 9 September 2020, Parliament passed a bill amending the Criminal Code(Queensland) (Code) and effectively making “wage theft” a criminal offence in Queensland, punishable by up to 10 years imprisonment. The bill is awaiting royal assent and likely to be enacted before 6 October 2020 (when Parliament is dissolved).
In this update, Workplace and Employment Law Special Counsel, Damon King, explains:
- the new offence of stealing, which applies to non-payment or underpayment of employment entitlements;
- the potential implications for employers and corporate officers involved in an offence; and
- how employers and their corporate officers can start to immediately mitigate their exposure to future prosecution.
What constitutes an offence
The changes made to the Criminal Code (Queensland) are minimalist in nature.
Primarily, the existing offence of stealing will be amended to include a new section 391(6A) as follows:
…a failure to pay an employee, or another person on behalf of the employee, an amount payable to the employee or other person in relation to the performance of work by the employee.
The drafting of the new offence is deliberately couched in broad terms to catch a wide variety of deliberate unlawful conduct, but not any failure to pay employee entitlements due to recklessness, as previously recommended by a Parliamentary committee of inquiry into “wage theft”.
The explanatory memorandum clarifies the wording of the new offence is intended to capture all manner of conduct resulting in failure to pay employment entitlements, including, for example:
- unpaid hours or underpayment of hours of work;
- unpaid penalty rates;
- unpaid superannuation contributions;
- unreasonable wage deductions; and
- avoidance of payments due to:
- “sham contracting”; or
- intentionally classifying an employee under the wrong award or wrong award classification.
Implications for employers and corporates officers
Section 398 of the Criminal Code has been amended to provide for a maximum penalty of 10 years imprisonment by way of punishment for the offence of stealing by an employer.
Most employers in the private sector are incorporated and regulated by the Fair Work Act 2009 (Cth). The bill and explanatory memorandum are both silent on the question of personal liability for corporate officers of offending employers.
Notwithstanding the above, there remains the prospect of individuals, such as corporate officers, being prosecuted as an accessory to a criminal offence committed by a corporate employer under section 7 of the Criminal Code. Section 7 of the Code has general application and imposes criminal liability on persons who are involved in the procuring and commissioning of a criminal offence including, for example, by way of omitting to do something to prevent an offence occurring.
What to do to avoid committing or being involved in an offence
These laws are novel and will be the first time that deliberate “wage theft” will be criminalised in Australia (recently enacted Victorian laws will not commence until 2021).
Numerous wage underpayment scandals in corporate Australia strongly suggest that industrial law advice and payroll audit compliance is not appropriately prioritised and adequately resourced by many employers.
In our view, corporate employers and their boards can take important lessons from their existing experience in ensuring their compliance with their workplace health and safety law obligations. More than ever, it will be critical to be able to demonstrate the exercise of proper due diligence by taking all reasonably practicable steps to ensure industrial compliance. In that regard, front end industrial law advice and payroll compliance audits and control measures should be appropriately resourced and periodically reviewed on a regular basis.
Importantly, legal professional privilege ensures that any confidential legal compliance advice obtained by an employer cannot be used in evidence against its interests and those of its corporate officers (as opposed to other service providers).
For further information, contact any member of our Workplace and Employment law team.