Thursday, 19 March 2020

Wage Theft Bill 2020

Statement of compatibility

Ms HENNESSY (Altona—Attorney-General, Minister for Workplace Safety) (10:26): In accordance with the Charter of Human Rights and Responsibilities Act 2006, I table a statement of compatibility in relation to the Wage Theft Bill 2020.

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (Charter), I make this Statement of Compatibility with respect to the Wage Theft Bill 2020 (Bill).

In my opinion, the Wage Theft Bill 2020, as introduced to the Legislative Assembly, is compatible with human rights protected by the Charter. I base my opinion on the reasons outlined in this statement.

Overview

The Bill protects employees by clearly making wage theft a crime. The Bill creates a new Wage Theft Act that will:

• create a new criminal offence of wage theft to capture employers, and officers of employers, who withhold employee entitlements from their employees dishonestly;

• create two new record keeping offences to capture employers, and officers of employers, who falsify or fail to keep employee entitlement records dishonestly with a view to gain for themselves or another, or with intent to cause loss to another; and

• establish the Wage Inspectorate Victoria (Inspectorate) to investigate and prosecute the new offences.

The Bill will hold employers to account for deliberate underpayment or non-payment of wages and other employee entitlements.

The Bill implements the government’s 2018 election commitment to:

• introduce new offences targeting employers who deliberately withhold employee entitlements, or who falsify or fail to keep employment records with individuals who commit these offences, being liable for up to 10 years imprisonment (level 5) or fines of up to $198,264, with companies facing fines of up to $991,320; and

• establish the Inspectorate.

Victims of wage theft experience financial pressures associated with low wages, including not being able to pay for daily expenses such as food, medicine, housing, utilities or save for their future. Temporary visa workers, who are disproportionality affected by wage theft, face the added stress of having their sponsorship arrangement cancelled resulting in potential deportation.

The new employee entitlement offences will discourage this exploitation and encourage fair industrial relations practices to positively influence the life quality of employees. The new offences will also send a clear message that theft of wages by employers is theft and should treated as seriously. The penalties reflect the significant consequences of wage theft on employees, impacting on the quality of life and dignity of employees.

The Bill establishes the Inspectorate as a public statutory authority to be headed by a Commissioner for the purpose of enforcing the offences. and whose functions include:

• to perform functions necessary for the administration of the Bill;

• to inform, educate and assist persons in relation to employee requirements and obligations under the Bill;

• to promote, monitor and enforce compliance with the Bill;

• to investigate the commission or possible commission of employee entitlement offence and other matters; and

• commencing criminal proceedings in relation to employee entitlement offences and related matters.

The Bill will allow the Commissioner to appoint wage theft inspectors who will have the power to:

• enter premises;

• obtain information and documents;

• seize evidence;

• bring criminal proceedings;

• apply for and execute search warrants; and

• accept undertakings, apply for an order to enforce an undertaking and commence proceedings if the Magistrates’ Court determines that the person has failed to comply with an undertaking,

The exercise of any coercive powers by the Inspectorate, the Commissioner and inspectors is appropriately safeguarded in the Bill. The Victorian Inspectorate will monitor the exercise of coercive powers by the Inspectorate, investigate and assess the conduct of the Inspectorate in relation to its use of coercive powers, and report on and make recommendations on the performance of these functions. The Inspectorate is required to provide the Victorian Inspectorate with assistance to enable the Victorian Inspectorate to conduct an investigation into its use of coercive powers under the Bill. The Victorian Inspectorate is required to include in its annual report details of:

• its monitoring of the exercise of coercive powers by the Inspectorate;

• the adequacy of reports made by the Inspectorate to the Victorian Inspectorate; and

• any action taken following any recommendations made by the Victorian Inspectorate.

Human Rights Issues

The Bill engages in the following human rights under the Charter:

• The right to privacy and reputation (section 13)

• The right not be deprived of property (section 20)

• The right to liberty (section 21)

• The right to be presumed innocent (section 25(1))

• Rights in criminal proceedings including the right to be presumed innocent (section 25(1)) and the right not to be compelled to testify against himself or herself or to confess guilt (section 25(2)(k).

For the following reasons, I am satisfied that the Bill is compatible with the Charter and, if any rights are limited, the limitation is reasonable.

Employee Entitlement Offences

Right to liberty

Section 21 of the Charter provides that every person has the right to liberty, and that a person must not be deprived of his or her liberty arbitrarily and except on grounds, and in accordance with procedures, established by law.

Clause 6 creates an indictable offence where an employer, or an officer of an employer, dishonesty withholds the whole or part of an entitlement owed to an employee, or dishonestly permits or authorises another person to do so. Clause 7 and 8 creates an indictable offence for an employer, or an officer of an employer, to falsify or fail to keep employee entitlement records dishonestly with a view to gain for themselves or another, or to prevent exposure of a financial advantage. These offences carry a maximum penalty of 10 years imprisonment for individual officers or self-employed persons, which interferes with a person’s right to liberty

The limitation will only arise where the prosecution can prove, beyond reasonable doubt, that a person has committed an offence and the court finds the person guilty and imposes a term of imprisonment. Subclauses 6(5) and 6(10) also provide the employer, or an officer of the employer, with a defence so if they can demonstrate they exercised due diligence to pay or attribute the entitlement to the employee, they will not be convicted. Further, in sentencing, the court will have regard to the sentencing principles set out in Part 2 of the Sentencing Act in determining the appropriate sentence.

Therefore, interferences with the right to liberty under this Bill are neither arbitrary nor unlawful and are compatible with section 21 of the Charter. Further, to the extent that any of these provisions may result in limiting the right to liberty, I consider that any such limitation is reasonable and justified in accordance with section 7(2) of the Charter.

Right to be presumed innocent

Section 25(1) of the Charter provides that a person charged with a criminal offence has the right to be presumed innocent until proven guilty according to law. The right in section 25(1) is relevant where a statutory provision shifts the burden of proof onto an accused in a criminal proceeding, so that the accused is required to prove matters to establish, or raise evidence to suggest, that they are not guilty of an offence.

Clause 13 provides that if a body corporate commits an employee entitlement offence, each officer of the body corporate must be taken to have also committed the offence and may be prosecuted and found guilty of the offence, regardless of whether the body corporate has been prosecuted for or found guilty of the offence. An officer of the body corporate is therefore deemed to have committed that offence unless the officer can demonstrate they exercised due diligence to prevent the commission of the offence. An ‘officer’ includes those individuals at the highest level of the organisation, for example, directors of bodies corporate. But in particular, it also captures 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.

Clause 14 and Clause 15 provide that if a partnership or an incorporated association commits an offence, each partner of the partnership and office holder of the unincorporated association also commits that offence if the partner or office holder failed to exercise due diligence to prevent the commission of the offence.

These provisions interfere with a person’s right to be presumed innocent. Section 25(1) is relevant in relation to the employee entitlement offences for an officer in a body corporate, partner in a partnership and office holder in an unincorporated association.

These provisions are relevant to the presumption of innocence as they may operate to deem an individual liable for an offence based on the actions of the body corporate, partnership or unincorporated association. In these circumstances, the accused does not need to have been directly involved in the commission of the offence to be held criminally liable. The provisions reverse the onus and require the accused to demonstrate on the balance of the probabilities that they exercised due diligence.

While the penalties for these offences are substantial, clauses 13(3), 14(4) and 15(4) provide that if the defendant would not have been liable but for the operation of clause 13, 14 or 15, the defendant is not liable to be punished by imprisonment for that offence.

In my view, it is justifiable to extend these offences and reverse onus provisions to officers of bodies corporate. A person who elects to undertake a position as an officer, partner or office holder accepts that they will be subject to certain requirements and duties, including a duty to ensure that the body corporate, unincorporated partnership or association does not commit offences. I further consider that any limitation of the right to the presumption of innocence occasioned by the reverse onus in clause 13, 14 and 15 is reasonably justified to ensure organisations and officers are held to account for ensuring appropriate systems are in place and entitlements are paid.

In my view, there are no less restrictive means reasonably available to deter corporate offending, which affects a significant number of employees who also have a right to property, being the entitlements lawfully owed to them. This is also proportionate as an officer liable under this provision is not liable to be punished by imprisonment. Further, a defendant who has exercised due diligence will be able to provide evidence of this and thereby appropriately avoid liability. In my opinion, any limitation of the right is reasonable and justified under section 7(2) of the Charter.

Investigations by the Inspectorate

Right to freedom of movement

Section 12 of the Charter provides that every person lawfully within Victoria has the right to move freely within Victoria and to enter and leave it, and has the freedom to choose when to leave.

Clause 52 of the Bill provides the Inspectorate with the power to compel a person to attend at a specified time and place 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. Insofar as compelling attendance restricts freedom of movement, the Bill limits this right. However, I consider that the limitation is reasonable and justifiable as it is necessary for the Inspectorate to have access to all relevant information to properly carry out its functions under the Bill. The limitation is relatively minor in nature, given that a person’s movement will only be restricted for a limited amount of time. Furthermore, the Bill includes a safeguard for the use of this coercive power as an audio or video recording and transcript must be provided to the Victorian Inspectorate, and the Victorian Inspectorate may require the Wage Inspectorate to provide a written report on the attendance.

The Bill amends the Victorian Inspectorate Act 2011 to give the Victorian Inspectorate the power to require an officer of the Inspectorate to attend and answer questions under that Act with respect to the exercise of a coercive power under the Bill. This power is important for the Victorian Inspectorate as it enables it to effectively conduct its role, which is in the public interest. Further, any restriction on freedom of movement is so minor, reasonable and proportionate that in my opinion the limitation is justifiable.

Right to privacy and reputation

Section 13 of the Charter states that a person has the right not to have their privacy, family, home or correspondence unlawfully or arbitrarily interfered with and the right not to have their reputation unlawfully attacked.

Power to enter premises or obtain a search warrant

The Bill provides Inspectors with the power during an investigation to enter premises with consent (clause 38), without consent in certain circumstances (clause 40) or with a search warrant (clause 44). While exercising this power to enter premises, an inspector may inspect or examine anything, seize or secure against interference any document or other thing, make copies or take extracts of any document and make any still or moving image, audio or audio-visual recording.

The power for inspectors to enter and search premises, and seize any document or other thing, with the consent of the owner or occupier does not, in my opinion, limit the right to privacy and reputation, as it is exercised with the consent of the owner or occupier. Appropriate safeguards also exist to ensure the owner or occupier is informed in giving consent, including the requirement for the inspector to inform the owner or occupier that they may refuse to give consent to the exercise of this power, including the seizure of a document or thing, or copy or extract of a document. The inspector must also inform them that any document or other thing seized or taken may be used in evidence in proceedings, and the owner or occupier must sign an acknowledgement form that includes a statement that the inspector has complied with these requirements.

The power to enter premises without consent may limit the right to privacy and reputation. However, I consider any limitation of the rights is reasonable and justifiable where consent to enter is not provided as the coercive power has the following restrictions:

• before it exercises the power, the inspector must hold a reasonable belief that there are documents, persons or other things at the premises that are relevant to the commission or possible commission of an employee entitlement offence, and must reasonably believe that the owner or occupier has not or would not consent to the inspector entering the premises;

• the power is restricted to premises that are a workplace, the registered office of a body corporate or at which work is carried out or records are kept that the inspector reasonably believes may be relevant to the commission or possible commission of an employee entitlement offence. A workplace will include residential premises where work is carried out, but does not include a part of any premises that is the domestic home of a person, and;

• a notice has been given to the owner or occupier at least five business days before entry, with immediate access only permitted where the inspector believes on reasonable grounds that the entry is necessary to prevent evidence being concealed, lost or destroyed, or the commission of an offence.

The Bill also provides inspectors with the power to apply for and obtain a search warrant to enter premises and search for a document or thing. This power may also limit the right to privacy and reputation. However, in my opinion this power is reasonable and justified as in practice the power would only be used where evidence is unable to be obtained using the Inspectorate’s investigative powers and where obtaining this evidence is necessary for the Inspectorate to effectively obtain information and fulfil its functions.

The power to obtain a search warrant is also restricted to circumstances where a magistrate is satisfied by evidence on oath or affirmation or affidavit of the Inspectorate, that there are reasonable grounds to believe that there is on the premises a document or thing connected with an employee entitlement offence.

The risk that the powers above present to a person’s reputation is limited, given a person who has been an Inspectorate staff member may only record or disclose any information in limited circumstances.

In my opinion any limitation on rights imposed by the exercise of these coercive powers is necessary to enable the Inspectorate to effectively obtain information and fulfil its functions.

Power to require production of documents and to answer questions

Clause 48 of the Bill provides the Inspectorate, when entering a premises, the power to require production of documents or part of a document, to examine that document or part, and to require a person at the place to answer any questions put by the inspector. This power may limit the right to privacy and reputation. However, I consider any limitation of the right is reasonable and justifiable, given the coercive power has appropriate safeguards in place:

• the power is limited to the investigation of the commission or possible commission of an employee entitlement offence;

• a person may refuse or fail to answer any question if answering the question would tend to incriminate them. As outlined below this privilege is not extended to the production of documents; and

• the use of the power must be reported, and an audio and video recording of any attendance must be provided, to the Victorian Inspectorate. The Victorian Inspectorate may require the Wage Inspectorate to provide a written report on the attendance.

The risk to a person’s reputation is limited, given a person who has carried out functions under this Bill may only make a record or disclose any information in limited circumstances.

In my opinion any limitation on rights imposed by the exercise of this coercive power is necessary to enable the Inspectorate to effectively obtain information and fulfil its functions.

Power to compel production of documents and other things or attendance

Clause 52 of the Bill provides the Inspectorate with a general power during an investigation to obtain information or evidence by requiring a person to produce to the Inspectorate a specified document or other thing or provide specified information at a specified time or manner. It also requires a person to attend and give evidence or answer questions on oath or affirmation or produce a specified document or other thing before the Inspectorate at a specified time and place. This power may limit the right to privacy and reputation.

In my opinion any limitation on rights imposed by the exercise of this coercive power is reasonable and justifiable as it necessary to enable the Inspectorate to effectively obtain information and fulfil its functions. This power is restricted to investigating the commission or possible commission of an employee entitlement offence.

The risk to a person’s reputation is limited, given a person who obtains information in carrying out a function under this Bill may only make a record or disclose any information in limited circumstances.

The power to compel production of documents and other things or attendance has appropriate safeguards in place for persons subject to the power such as:

• a notice must be served on the person with an accompanying statement that includes a statement that:

o the person has a right to legal representation;

o the person may claim a privilege;

o the person is entitled to seek legal advice in relation to the notice; and

o the power does not need to comply with the notice if the person summoned is under the age of 16 years when the notice is given.

• the Inspectorate cannot issue a notice to a person who is aged at least 16 years, but under 18 years, at the time the notice is given, unless the Victorian Inspectorate considers on reasonable grounds that the information, evidence, document or thing that the person could provide may be compelling and probative evidence, and it is not practicable to obtain the evidence, information, document or thing by any other means.

The power to compel attendance also has the following safeguards:

• a person attending who has insufficient knowledge of the English language must be provided with a competent interpreter;

• a person attending must be accompanied by an independent person if the Inspectorate believes the person attending has a mental impairment or the person has reasonably satisfactory medical evidence that they have a mental impairment;

• a person attending must be accompanied by a parent, guardian or independent person; and

• the use of the power must be reported, and an audio and video recording must be provided, to the Victorian Inspectorate.

Confidentiality requirements

Clause 77 of the Bill allows a person to disclose information acquired in carrying out a function under the Bill if:

• the information is reasonably necessary for the person to perform his or her functions under the Bill;

• the disclosure is to a court or VCAT in the course of legal proceedings;

• the disclosure is under an order of a court or VCAT;

• the disclosure is to the extent reasonably required to enable the investigation or the enforcement of a law of Victoria or any other state or territory or of the Commonwealth; or

• the disclosure is with written consent of the person to whom the information relates.

The Commissioner or an inspector may also disclose information acquired in carrying out a function under the Bill that relates to the commencement, progress or outcome of an investigation if the Commissioner is satisfied that it is in the public interest to do so.

This power engages section 13 of the Charter as it limits the privacy of a person being investigated by the Inspectorate and may increase the risk of reputational damage by increasing the number of people who have access to potentially damaging information.

In my opinion any limitation is justified because the power is only permitted to the limited circumstances above, and the relevant person cannot make a disclosure outside these listed circumstances.

In addition, this power is subject to any other restriction on the provision or disclosure of information under this Bill or any other Act.

Property rights

Section 20 of the Charter provides that a person must not be deprived of their property other than in accordance with law. This right requires that powers which authorise the deprivation of property are conferred by legislation or common law and are confined and structured.

There are four situations where the Inspectorate may deprive a person of property:

1. An inspector, when entering premises with consent, may seize any document or other thing found at the premises.

2. An inspector, when entering premises without consent, may seize or secure against interference, any document or other thing.

3. An inspector, when entering premises with a search warrant, may seize any document or other thing. The inspector may seize a document or other thing not specified in the warrant in limited circumstances.

4. An inspector may require a person to produce a specified document or other thing at a specified time and in a specified manner.

These powers engage section 20 but do not limit it. This is because these powers are prescribed by the Bill. The first three powers are also appropriately confined to certain circumstances:

• The first and second identified power to enter and seize anything with consent is appropriately confined to circumstances where the inspector reasonably believes on reasonable grounds that the document or thing is connected with the commission or possible of commission of an employee entitlement offence. In using the first power, an inspector must ask the owner or occupier to sign an acknowledgement form before the inspector seizes the document or other thing; and

• The third identified power to exercise powers under a search warrant will in practice be confined to circumstances where the evidence is unable to be obtained using the Inspectorate’s investigative powers and where a magistrate is satisfied that there are reasonable grounds to believe that there is on the premises a document or other thing, or a document or other thing of a particular kind, connected with an employee entitlement offence. The inspector may seize a document or thing not specified in a search warrant if it could have been included in a search warrant, it is evidence of an employee entitlement offence, and the inspector believes on reasonable grounds that it is necessary to seize that document or other thing in order to prevent its concealment, loss or destruction or its use in an employee entitlement offence.

The exercise of these coercive powers will be subject to oversight by the Victorian Inspectorate. All powers also require the Inspectorate to take reasonable steps to return any seized documents or thing to the owner if the reason for its seizure no longer exists. The document or thing may be kept for a period exceeding three months in limited circumstances.

To the extent that these powers could be considered to deprive a person of property, any such interference will be appropriately confined and tailored to ensuring compliance with the Bill. I also believe these prescribed powers are necessary to enable the Inspectorate to effectively obtain information and fulfil its functions. I therefore consider these provisions to be compatible with the right to property under section 20 of the Charter.

Right to liberty and security of person

Division 2 of Part 5 of the Bill contains offences that carry a term of imprisonment for a person who:

• assaults, directly or indirectly intimidates or threatens, or attempts to intimidate or threaten, an inspector or a person assisting an inspector;

• is given a notice to take an oath, make an affirmation or answer a question and the person refuses or fails, without reasonable excuse, to take an oath or make an affirmation when required to do so;

• has been given a notice to produce a document or other thing to the Inspectorate or attend the Inspectorate and, without reasonable excuse, fails to comply with the notice;

• gives information to an inspector, the Inspectorate or the Commissioner that the person believes to be false or misleading in a material particular; or

• produces a document to an inspector, the Inspectorate or the Commissioner that the person knows to be false or misleading in a material particular without indicating the respect in which it is false or misleading and, if practicable, providing correct information.

The maximum term of imprisonment is two years for all offences under Part 5 of the Bill, except for the offence of discriminating against a person for complying with the Bill which is a maximum of one year.

Under section 21(3) of the Charter, a penalty that includes a term of imprisonment may only limit the right not to be deprived of liberty where it is on grounds and in accordance with procedures that are established by law. The penalties in this Bill will be established by law, will be subject to a finding by a Court, and the grounds for imprisonment are clearly articulated in law. As such, I do not consider the Bill limits the right to liberty and security of person, as provided by section 21 of the Charter.

Rights in criminal proceedings

Section 25 of the Charter establishes that a person charged with a criminal offence is entitled without discrimination to the minimum guarantee that he or she will not be compelled to testify against himself or herself or to confess guilt.

Clauses 49 and 55 of the Bill limits this right to the extent that it abrogates the privilege against self-incrimination for natural persons in relation to a request for documents by the Inspectorate, with a direct use immunity provided for any documents obtained that are not required to be kept by law. Those documents cannot be used as evidence against the person who produced them in a criminal proceeding for an employee entitlement offence.

The exercise of coercive powers under the Bill will be subject to oversight by the Victorian Inspectorate.

In my opinion, any limitation on the privilege against self-incrimination for natural persons is justified because:

• the abrogation of the privilege against self-incrimination is necessary to enable the Inspectorate to effectively obtain information and fulfil its functions given the offences are document-based offences and the Inspectorate would face great difficulties investigating the offences if the privilege against self-incrimination was maintained in relation to documents. It is in the public interest to successfully prosecute these offences and protect exploited employees;

• a document, and any information, document or thing obtained as a direct consequence of producing the document, that is not required to be kept by law will not be admissible in evidence against the person in respect of an employee entitlement offence. Documents that are required to be kept by law will be admissible in evidence against the person for any offence, and documents not required to be kept by law will be admissible in evidence against the person for offences other than employee entitlement offences.;

• other Victorian statutes provide for such an abrogation in relation to documents, particularly regulatory integrity bodies;

• at common law the protection accorded to the compelled production of pre-existing documents is considerably weaker than the protection accorded to oral testimony or to documents brought into existence to comply with a request for information; and

• in the context of a regulated scheme such as the Fair Work scheme, it is the expectation that documents or records are required to be produced during the course of a person’s participation in that scheme and exist for the dominant purpose of demonstrating that person’s compliance with his or her relevant duties and obligations. The duty to provide documents in this context is consistent with the reasonable expectations of these individuals as persons who operate within a regulated scheme.

I therefore consider these provisions to be compatible with the rights in criminal proceedings under section 25 of the Charter.

For the reasons outlined above, the proposed offences contain in this Bill are compatible with human rights set out in the Charter.

The Hon Jill Hennessy MP

Attorney-General

Minister for Workplace Safety

Second reading

Ms HENNESSY (Altona—Attorney-General, Minister for Workplace Safety) (10:27): I move:

That this bill be now read a second time.

I ask that my second-reading speech be incorporated into Hansard.

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.

Enforcement model

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.

Mr SOUTHWICK (Caulfield) (10:27): I move:

That the debate be now adjourned.

Motion agreed to and debate adjourned.

Ordered that debate be adjourned for two weeks. Debate adjourned until Thursday, 2 April.