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Criminalisation of wage theft from workers could be unconstitutional

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A research paper has suggested NSW and Victoria Labor proposals to criminalise wage theft could be blocked.

The University of Melbourne paper, as first reported on Fairfax Media, casts doubt on whether threatening to send employers to jail would be practical or even legal.

The biggest hurdle is that industrial relations is considered a federal government responsibility — meaning criminalisation in NSW and Victoria may be under a cloud from the start.

“A constitutional challenge could be argued on the basis that federal laws already ‘cover the field’, resulting in any attempts by the states to regulate industrial relations as being ruled inconsistent with the federal scheme and held to be invalid,” said the report authors Melissa Kennedy and John Howe.

The researchers said that even if criminalisation was enacted, there are difficulties in enforcing and prosecuting. Civil action would be more practical, according to the report.

State criminalisation laws could also conflict with Fair Work Ombudsman’s work to recover employee entitlements.

“Fragmented responses and overlapping jurisdiction with the [Fair Work Ombudsman] will inevitably cause difficulties with enforcement and will undermine the civil regulators objective, which has the potential to result in less effective regulation,” the report said.

Considering such difficulties, and that many employers unknowingly carry out wage theft, the researchers doubted criminalisation would have a sufficient deterrent effect.

“As such, criminalisation at a state level as a compliance strategy is ill-advised.”

The last year saw several high-profile cases of wage theft come into the public eye, including a Fairfax investigation into 7-Eleven Australia’s alleged deprivation of franchise employees.

In response, both the Victorian Labor government and NSW Labor opposition have proposed fines and jail terms at a criminal level for employers caught exploiting vulnerable workers.

NSW Labor has also proposed making franchisors accountable for underpayment by franchisees.

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