Directors and business owners, and potentially anyone who aids an underpayment, could face criminal prosecution under new Queensland laws which could put unscrupulous employers behind bars for underpaying their employees.
The amendments to the Criminal Code in the Criminal Code and Other Legislation (Wage Theft) Amendment Bill 2020 passed with Queensland Parliament's bi-partisan support.
The changes mean employers who deliberately underpay their workers could be jailed for up to 10 years or face unlimited fines under the strict new laws.
The legislation expands the definition of "stealing" in the Criminal Code, making it a crime to 'intentionally' fail to pay proper wages and entitlements, including failure to pay superannuation, to workers.
The new laws also create a fast track and low-cost wage recovery process for workers to claim an underpayment of their wages through the Queensland Industrial Magistrates Court.
Previously, underpayment remedies were limited to financial penalties, but if deliberate or intentional conduct to withhold fair payment can be shown, there is now a risk of imprisonment.
Expanded definition of "stealing" in the Criminal Code
The amendments add a further limb to the definition of stealing (section 391 of the Criminal Code). Generally, an employer will commit the offence of stealing when they fraudulently do not pay an employee an amount owed in relation to work performed (wages or super).
The entitlements can be:
- entitlements under a modern award or enterprise agreement (but potentially not a certified agreement or collective agreement – as they are not fair work instruments under the Fair Work Act 2009 (Cth))
- amounts deducted unlawfully or withheld
- unpaid superannuation
- amounts owed under a contract of employment
- amounts owed under a Fair Work Commission Order, including orders made following unfair dismissal proceedings.
Importantly, the failure to pay the employee must be fraudulent. This means accidental underpayments, such as when an employer accidentally misclassifies an employee, will not meet the new criminal definition.
The amendments make stealing from an employee a special case of stealing, reflected by the harsher maximum penalty of 10 years imprisonment (compared to the maximum of five years imprisonment for a general stealing offence) for the new crime.
This is the same maximum penalty faced by a worker found to have stolen from their employer.
The amendments also add an aggravating circumstance to the offence of fraud where the offender is the employer of the victim. This offence carries a maximum penalty of 14 years, which is the same as the maximum penalty for an employee who commits fraud against their employer.
Corporations and individual business owners at risk
While individuals who are convicted of the offence face potential jail terms as well as fines, corporations can also be criminally liable for offences under the Criminal Code, although they only face financial penalties.
Any corporation that commits the offences faces an unlimited maximum penalty. If it ever arises, the court will most likely consider the penalties imposed for similar civil cases as an indicator of what penalty would be appropriate.
Public interest and self-reporting
An interesting issue for investigators and prosecutors will be determining when, if at all, it will be in the public interest to investigate or bring a prosecution in relation to these offences.
This may be a particularly difficult question where there are alternatives to prosecution available to the victim that may lead to a similar or better result.
Workers who have been short-changed will usually be able to bring civil proceedings against their employer and seek significant civil penalties and orders for compensation.
Another interesting issue may be whether these offences affect an employer's future decision to self-report underpayments when they have been discovered to the Fair Work Ombudsman.
The possibility of criminal offences, or even criminal investigation, may be a significant factor to consider before potentially making any admissions to the Fair Work Ombudsman when self-reporting.
Similar offences have been implemented in Victoria and are now being considered in Western Australia.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.