Criminal implications for underpaying staff

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Until earlier this month, the only recourse against employers for underpayments was through civil litigation, whether through the small claims process (Industrial Magistrates Court) or the Federal Circuit Court. An increase in wage theft cases across Australia has triggered the State Government (Qld) to enact the Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020 (Wage Theft Act) which imposes harsher consequences.

On 14 September 2020, the Criminal Code of Queensland was amended to include a new section 391(6A) which provides that stealing includes:

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 –

(a) the amount is a thing that is capable of being stolen; and

(b) subsection (6) does not apply; and

(c) the amount is converted to the person’s own use when—

(i) the amount becomes, under an Act, industrial instrument or agreement, payable to the employee or to the other person on behalf of the employee; and

(ii) the amount is not paid.

Subsection 391(6A)(c)(i) by deduction would therefore include:

  • superannuation;
  • penalty rates;
  • wages (including wrong classification under an instrument or agreement);
  • entitlements;
  • incorrect applications of deductions; and/or
  • ‘sham contracting’.

Where guilty employers were previously ordered to backpay employees and civil penalties for contravention of the Fair Work Act 2009 (Cth), they could now face a maximum 10 years imprisonment for stealing (s 398 of the Criminal Code).

The inclusion of wage theft under the Criminal Code means the Queensland Police Services (QPS) are granted jurisdiction to investigate wage theft claims. Where employers have accidentally underpaid staff and sought to rectify underpayments once identified, claims are likely to proceed in the civil jurisdiction. How the QPS will investigate wage theft and prosecute these matters remains uncertain.

It is important to note that the element of ‘intention’ is required to establish criminal conduct. Intent or intention are familiar words particularly in the criminal jurisdiction. It is expected that in dealing with wage theft, the Courts must draw an inference from facts established by evidence concerning the employer’s state of mind. It must be proven beyond reasonable doubt that an employer meant to underpay (steal from) an employee.

Want more information or need advice on wage theft and underpaying staff?

If you are an employer or employee, and you have any questions in relation to wages, modern awards or industrial instruments, entitlements and/or employment contracts, please do not hesitate to contact our team.