Significant doubt about Constitutional validity of Victorian Wage Theft Bill

“Ai Group strongly opposes the Victorian Government’s Wage Theft Bill. The legislation and the term ‘wage theft’ is not appropriate. It is an overly emotive term coined by unions to refer to certain types of underpayments. The term risks employers that make payroll errors being branded as thieves. The legislation is an attack on Victorian employers at a time when businesses need lots of support in order to survive through, and recover from, the COVID-19 pandemic. There is also significant doubt about the Constitutional validity of the legislation,” Australian Industry Group Chief Executive, Innes Willox, said today.

“Underpayments – deliberate or unintentional – are comprehensively addressed in the Commonwealth’s Fair Work Act 2009. Penalties for underpayments were increased by up to 10 times three years ago and penalties for failure to keep proper pay records were increased by up to 20 times. In addition, the Federal Government has announced potential further increases to penalties.

“Section 26 of the Fair Work Act 2009 excludes a State law that has as ‘one of more of its main purposes….providing for the enforcement of terms and conditions of employment’. A key purpose of the Victorian Wage Theft Bill is to provide for penalties to be imposed on employers that fail to pay employee entitlements or keep required pay records in certain circumstances, and to establish the Wage Theft Inspectorate. Labelling certain types of underpayments as ‘wage theft’ does not change the character of, or the purpose of, the Victorian legislation.

“A challenge by the Victorian Government and other State Governments to the validity of a relatively similar provision in the Workplace Relations Act 199 to section 26 of the Fair Work Act 2009 was rejected by the High Court in New South Wales v Commonwealth of Australi [2006] HCA 52 (‘the Workchoices Case’).

“Before the legislation is voted upon, the Victorian Government should release any advice that it has received from the Victorian Solicitor-General on the validity of the legislation. It is not in the community’s interests for legislation to be passed that is invalid, nor is it in the community’s interests to be subjected to the uncertainty that would result from the matter being tested in the High Court.

“The Commonwealth Government has established a working party of employer groups and unions to consider compliance and enforcement matters. The working party members (including Ai Group) will be focussing on all the issues and considering various reform options. The Victorian Bill should not be voted upon before the working party process has concluded,” said Mr Willox.

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