MS TIERNEY (Western Victoria—Minister for Training and Skills, Minister for Higher Education) (18:05): I move, by leave:
That the second-reading speech be incorporated into Hansard.
Motion agreed to.
Ms TIERNEY: I move:
That the bill be now read a second time.
Incorporated speech as follows:
This Bill will deliver on the Victorian Government’s commitment to introduce criminal offences to target wage theft, to ensure that Victorian workers receive what they are lawfully entitled to–a fair day’s pay for a fair day’s work. In particular, this Bill will:
• create new wage theft offences, targeting employers who steal pay and other employee entitlements, or engage in efforts to obscure wage theft through dishonest record keeping practices;
• establish the Wage Inspectorate Victoria (the Inspectorate) as statutory body and provide it with functions and powers to enable it to investigate and prosecute the new wage theft offences.
In recent months, we’ve seen story after story of Australian workers being exploited and a Commonwealth system that far too often fails to adequately respond. A string of large, high profile companies have recently self-reported almost half a billion dollars in possible underpayments with Woolworths alone admitting it may be responsible for failing to pay over $300 million in entitlements.
It is clear that the existing Commonwealth civil penalty regime does not provide a strong enough deterrent to prevent wage theft. This Bill sends a strong message to employers that stealing the lawful entitlements of your employees will not be tolerated and significant penalties, including jail terms, can be imposed on those who do. This Bill makes it clear that theft is theft, and that just because it was committed by an employer does not make it any less of a crime.
The Bill will provide that employers and their officers may be held criminally liable for employee entitlement offences. Employers, and officers of employers, can be held criminally liable:
• where they dishonestly withhold the whole or part of an entitlement owed to an employee, or dishonestly permit or authorise another person to do so;
• where they falsify employee entitlement records to dishonestly obtain a financial advantage, or prevent its exposure, or dishonestly permit or authorise another to do so; and
• where they fail to keep employee entitlement records to dishonestly obtain a financial advantage, or prevent its exposure, or dishonestly permit or authorise another to do so.
The maximum penalties for these offences will be nearly $1 million ($991,320) for bodies corporate and 10 years’ imprisonment for individuals. These penalties are consistent with the penalty for theft under section 74 of the Crimes Act 1958 (Vic). They are designed to help prevent theft of employee entitlements by deterring organisations and individual officers from not paying what is owed to their employees or falsifying or failing to keep employee entitlement records.
The offences will apply to employers and officers of employers, of all types and sizes, including corporations, individuals and the Crown, to ensure that prosecutions may be brought in all appropriate cases. ‘Employment’ is not defined in the Bill so that the common law will apply, meaning the law developed through judgements in cases heard by courts, including the High Court. Under the common law, the court considers each case against a list of factors indicative of an employment relationship.
Criminalising withholding of employee entitlements
The theft offence will criminalise the conduct of employers and officers of employers who dishonestly withhold entitlements. The Bill provides a new definition of ‘dishonesty’ specifically for the employee entitlement offences, departing from the standard of dishonesty applied to the general Victorian theft offence. An employer or officer will cross the line if they are dishonest to the standards of a reasonable person. This is an objective test and is intended to capture conduct that is deliberately or recklessly dishonest.
The Bill provides that ‘employee entitlements’ include any amount payable by an employer to an employee in accordance with a relevant law, contract or agreement. This may include wages, allowances, gratuities, superannuation and other entitlements such as leave. The Bill is intended to capture a wide variety of conduct that results in entitlements being withheld, including ‘cashback’ arrangements, unlawful deductions, ‘sham contracting’ and illegal ‘phoenixing.’
The Bill is not intended to punish employers who have made genuine mistakes. A defence is available to employers and officers who can prove that they exercised due diligence to pay or attribute employee entitlements. To rely on the defence, the employer will have had to have taken reasonable steps before the commission of the offence. What is reasonable for employers will depend on the size and nature of the organisation, and disregarding requirements of a regulator will be evidence that an employer has not taken reasonable steps
Falsification of and failure to keep employee entitlement records
Employers and officers engaging in wage theft commonly falsify employee entitlement records as part of their offending or covering it up. The falsification of entitlement records offence will include producing, making or copying a record that is misleading, false or deceptive. It will also include altering a record or providing information that causes the record to be misleading or false. The prosecution will be required to prove the falsification was done dishonestly with a view to obtaining a financial advantage or preventing a financial advantage from being exposed. The definition of ‘falsify’ will not capture people who accidentally mis-record details and rectify payroll errors in an appropriate and honest manner.
The offence of failing to keep an employee entitlement record will make employers and officers criminally liable if they dishonestly fail to keep employment records with an intention to gain a financial advantage or prevent a financial advantage from being exposed. The offence will not capture employers or officers who fail to keep a record because of an honest oversight.
Body corporates and officers could be held liable
Organisations will be held accountable through a new corporate criminal liability model. The conduct and state of mind of officers and the board of directors will be attributed to the organisation. The conduct of other employees will be attributed where they are acting under the direction of an officer or the board, or where a corporate culture exists that encourages or supports the conduct. The state of mind of other employees will also be attributed where there is such a corporate culture.
To ensure that organisations are accountable for an officer’s action, if an officer commits an offence, the organisation is also taken to have committed an offence. The organisation has a defence if it exercised due diligence in preventing the commission of an offence. An organisation would also not be liable for acts of ‘rogue’ employees (that is, employees who act outside the actual or apparent scope of their authority).
The Bill will hold individual officers to account, as well as the organisation. An ‘officer’ includes those individuals at the highest level of the organisation, for example, directors or partners. It will also capture people who participate in making decisions that affect a substantial part of the organisation’s business, or who have the capacity to significantly affect the organisation’s financial standing, regardless of their position within the organisation.
If the body corporate is liable, the Bill provides that criminal liability can also be attributed to officers unless they are able to demonstrate that they exercised due diligence to prevent the conduct. If an officer is found criminally liable solely as a result of this provision, the officer will not be liable for imprisonment. This approach will encourage corporate cultural change by making all officers responsible for ensuring that their employees are being paid their entitlements, even if those officers are not directly involved in payroll decisions.
The offences will not apply to employees who are not ‘officers’. This is consistent with the Bill’s objective, which is to hold organisations and high-level officers to account for ensuring appropriate systems are in place and entitlements are paid.
This Bill provides that Part II, Division 1 of the Crimes Act 1958 (Vic) will apply to the wage theft offences. This will enable third parties who are complicit in offending, including third parties who ‘intentionally assist’ in the offending, to be prosecuted. This could include head franchisors who ‘encourage’ franchisees to engage in wage theft to assist their business viability.
The offences are intended to capture situations where an entitlement is paid or accrued in Victoria, where the employer is based in Victoria or where the employee performed the work in or mainly in Victoria.
The Wage Inspectorate Victoria
To ensure that the new wage theft laws are effectively enforced, offences will be investigated and prosecuted by the independent statutory body, the Wage Inspectorate Victoria (Inspectorate). The Inspectorate will have expertise in industrial relations laws as well as a dedicated criminal law enforcement arm.
The Bill provides the Inspectorate with functions and powers related to the enforcement and prosecution of the employee entitlement offences, as well as information and evidence gathering powers necessary to support the investigation of potential offences.
The Inspectorate will be led by a Commissioner, appointed by the Governor in Council on the recommendation of the Minister for Industrial Relations. Investigative and prosecutorial functions of the Inspectorate will be independent and not subject to Ministerial direction or control.
The Victorian Inspectorate (VI) will be responsible for oversight of the Inspectorate and the exercise of its coercive powers.
To ensure the effectiveness of the offences, the Bill provides for a robust enforcement framework that facilitates appropriate and proportionate responses to offending, including commencing criminal proceedings where appropriate. The Bill provides an enforcement model which includes powers to enable the Inspectorate to inquire into and investigate employee entitlement offences and bring criminal proceedings in circumstances where there is evidence of an offence and it is in the public interest to do so.
The Bill provides for the appointment of wage theft inspectors with strong and appropriate investigative powers, including the power to enter premises, obtain information and documents, seize evidence, request attendance under oath or affirmation before the Inspectorate, apply for and execute search warrants, bring criminal proceedings and enter into and accept undertakings, which may be enforced against the employer in the event that they are breached.
In the rare event that Victoria Police were needed to facilitate a wage theft investigation, the Inspectorate would seek assistance from them as required.
The Bill provides for inspectors to enter premises, at a reasonable time, for the purpose of inquiring into an alleged employee entitlement offence. They must hold a reasonable belief that there are documents, persons or other things at the premises that are relevant to the suspected offence in order to exercise this power and may enter either by consent or through the service of a written notice.
On exercising a power of entry, and inspector will conduct inquiries into suspected or alleged employee entitlement offences, inspect, examine or seize anything at the premises and make copies of or take extracts from any document produced, take photographs and document observations. The inspector can also require the production of documents and require a person to answer any questions. It will be an offence for a person to refuse or fail to comply with the requirement without reasonable excuse.
A person may refuse to answer any questions if the answer may tend to incriminate the person or expose them to a penalty. The privilege against self-incrimination will apply to natural persons in relation to a request to answer any question but will not apply to bodies corporate, consistent with section 187 of the Evidence Act 2008 and the common law approach. However, the privilege against self-incrimination is not available in response to a request by an inspector to provide a document.
Documents provided under this power will only be admissible in proceedings if they are documents required to be kept by law or in proceedings in relation to the false or misleading nature of the information.
The Bill contains compulsory powers to obtain information or evidence for the purpose of ascertaining whether an employee entitlement offence has been committed. These information-gathering powers are necessary to ensure that the Inspectorate is able to obtain the relevant information it needs to make decisions about prosecution. Compulsory powers can only be exercised by serving a written notice requiring the recipient to provide the Inspectorate with the relevant information, document or thing sought at a specified time and in a specified manner, or attend to give evidence or answer any relevant questions on oath or affirmation before the Inspectorate.
The power to compel attendance and compulsorily answer questions would usually be used if the Inspectorate is unable to obtain the information by consent or through the exercise of other powers. This power cannot be used for a person under the age of 16 years. Appropriate safeguards are in place when exercising this power, including requirements to allow a person to be represented by a legal practitioner, a competent interpreter where a person does not have sufficient knowledge of the English language, a person with a mental impairment to be accompanied by an independent person and a person aged 16 to 18 years to be accompanied by a parent, guardian or independent person known to the person attending.
The Bill also provides inspectors with the power to apply for and obtain a search warrant in order to seize evidence in circumstances where the evidence is unable to be obtained using investigative powers. A magistrate will be able to issue a search warrant if the court is satisfied that there are reasonable grounds for suspecting that a document or thing in a premises is relevant to determining whether any offences under this Act are being commissioned.
The VI will monitor the exercise of coercive powers by the Inspectorate, investigate and assess the conduct of the Inspectorate’s wage theft inspectors, and report on and make recommendations on the performance of these functions.
The Inspectorate will have the power to accept undertakings from an employer in relation to an alleged commission of a relevant offence. The undertakings are not intended to be used to recover employee entitlements or seek similar remedies. The Inspectorate will be able to take any necessary civil action against employers who breach the undertakings.
The Inspectorate will be responsible for bringing criminal proceedings for the new wage theft offences. The decision to bring criminal proceedings will lie with the Commissioner following an assessment of the evidence and a determination that there is a reasonable prospect of conviction and it is in the public interest to prosecute.
The Office of Public Prosecutions will be responsible for prosecuting indictable offences and will take over proceedings after the accused is committed to trial.
The Inspectorate will be able to seek restitution orders under section 84 of the Sentencing Act 1991 to enable recovery of unpaid entitlements. Those orders can be made in addition to any penalties imposed following a plea or finding of guilt.
The offences will commence on a day to be proclaimed or at the default commencement date of 1 July 2021.
The Bill will hold accountable employers who steal from their workers, thereby ensuring workers are protected from exploitation and receive a fair day’s wage for a fair day’s work.
I commend the Bill to the house.