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Bookkeeping – Wage theft MOST COMMON breach – Fair work Inspectors find
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Published on Thursday, 22 February 2024 11:05
Did you know, employee underpayments and wage theft is a growing issue in Australia, and the most common breach identified by Fair Work Inspectors – this has been recognised as a priority for the Fair Work Ombudsman.
Ongoing concerns about the frequency of significant underpayments of payroll led the Victorian Parliament to pass Australia’s first laws on wage theft to create a criminal offence for employers who dishonestly withhold or deduct any employment entitlements.
The rest of the country is following suit with Queensland already criminalising wage theft, while NSW recently increased its payroll tax laws in a bid to crack down on wage underpayments.
Victorian Wage Theft Laws
From 1st July 2021, new wage theft laws became operative in Victoria. The laws, as part of the Wage Theft Act 2020 (Vic), see the introduction of three new wage-based offences carrying significant penalties, including imprisonment.
The new Victorian laws create three primary offences, each of which attract penalties of up to $991,320 for companies, $198,264.00 for individuals or up to 10 years’ imprisonment.
These offences are:
- Dishonestly withholding employee entitlements or expressly or impliedly authorising or permitting another person to do so.
- Falsification of employee entitlement records to dishonestly obtain a financial, or to prevent the exposure of a financial advantage having been obtained.
- Failure to keep an employee entitlement record to dishonestly obtain financial advantage or to prevent exposure of a financial advantage having been obtained.
Criminal liability also extends to individual officers (such as directors, and management) who engage in such conduct. Employers who make honest mistakes or who exercise due diligence in paying wages and employee entitlements will not be guilty of wage theft under the new laws.
However, they may still be guilty of contravening the Fair Work Act and face prosecution by the Fair Work Ombudsman, even if the contravention wasn’t deliberate.
QLD Wage Theft Laws
Wage theft can take various forms such as the deliberate underpayment of wages, having entitlements such as leave and penalty rates deliberately withheld, and an employer deliberately not making required superannuation contributions on an employee’s behalf.
The Queensland Criminal Code at section 391 (‘Definition of stealing’) includes deliberate, intentional behaviour leading to under or non-payment of entitlements as a criminal offence. This could include where deliberate wage theft occurs through:
- Unpaid hours or underpaid hours.
- Unpaid penalty rates.
- Unreasonable deductions.
- Unpaid superannuation.
- Withholding entitlements.
- Underpayment through intentionally misclassifying a worker including wrong award, wrong classification, or by ‘sham contracting’ and the misuse of Australian Business Numbers (ABN).
- Authorised deductions that have not been applied as agreed.
BAS Agents and Bookkeepers
BAS Agents and Bookkeepers should remind their business clients to pay close attention to the issues surrounding payroll, and assess whether they are paying their employees correctly.
Advise the businesses you work with to ensure that:
- Employees are being paid in accordance with any applicable Modern Award, Enterprise Agreement, and/or employment contract.
- Review onboarding processes.
- Employee records are being maintained in accordance with Fair Work Act 2009.
- Roles and positions are regularly reviewed to ensure employees are appropriately classified.
- HR, management, and payroll are provided with appropriate training.
You are required to adhere to the TASA Code of Conduct, and if you knowingly or mistakenly participate in wage theft then you face serious consequences from the Tax Practitioners Board (TPB).
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