The term “wage theft” has been bandied about a lot in the wake of the penalty decision handed down last month against the Commonwealth Bank of Australia and Commsec following findings of widespread underpayments.

CBA were found to have failed to ensure that workers employed under individual agreements were better off overall than if they had been employed under the CBA Group enterprise agreement, and also failed to make top-up payments to affected employees. In his judgment, Justice Bromwich was fairly scathing of CBA describing CBA as being reckless and that the underpayments were easily avoidable for a large, financial institution. Importantly, though Justice Bromwich did find the underpayments were serious, he did not find that CBA and Commsec’s wrongdoing was deliberate. Unfortunately for CBA and Commsec, an absence of deliberate wrongdoing is not a defence to liability to pay civil penalties and Bromwich J ordered CBA and Commsec to pay combined penalties of $10.34M.

The ACTU and even the AFR were very quick to jump on the story and declare that CBA had engaged in “wage theft” with both noting the significant penalties as well as the Court’s finding that CBA authorised the conduct which resulted in the underpayments.

What exactly is wage theft?

Theft (of any kind) is a crime and requires evidence that a person intentionally took something that didn’t belong to them, with the intention of permanently depriving the owner of the thing stolen. Victoria and Queensland are the only jurisdictions in Australia which currently have laws specifically dealing with the criminal offence of wage theft. On 1 July 2021, under the Wage Theft Act 2020 (Vic), it became a crime for an employer in Victoria to:

• deliberately and dishonestly underpay employees;
• deliberately and dishonestly withhold wages, superannuation or other employee entitlements;
• falsify employee entitlement records to gain a financial advantage; and
• avoid keeping employee entitlement records to gain a financial advantage.

From 10 September 2020, the Queensland Parliament expanded the offences of stealing and fraud under its Criminal Code to include specific offences relating to wage theft which, is defined as deliberate intentional behaviour leading to under or non-payment of [employment] entitlements."

The wage theft provisions in Qld do not, however, apply to workers whose employment is governed by the Fair Work Act 2009, meaning the wage theft laws effectively apply only to Qld State and Local Government employees.

From 1 January 2025, intentionally engaging in conduct which results in a failure to pay amounts required to be paid to an employee on or before the day the payments are due will be an offence potentially attracting maximum penalties of more than $1.5M for individuals and $7.5M for companies.

The critical element which distinguishes the crime of wage theft from other civil contraventions relating to underpayment of wages is that the conduct be deliberate or intentional.

But did CBA engage in wage theft?

The short answer is “no”. Leaving aside the fact that CBA were not being prosecuted for wage theft, the Court also did not find evidence that the underpayments by CBA or Commsec were deliberate or intentional. Significantly, the words “theft” and “stealing” do not appear anywhere in the Federal Court Judgment or in the Fair Work Ombudsman’s press release following the Federal Court decision. The term ‘wage theft” was only (mis)applied to the story in the media after the fact.

In another case last month, Easy Vaping Pty Ltd, its sole director Kate Chan, and its operations manager Edward Chan were ordered to pay penalties for underpayments arising from an unlawful “cashback” scam whereby the company used coercion to force an employee, Mr Hong to repay a portion of his wages in cash so that the recorded earnings appeared to comply with Award minimums but did not reflect the worker’s true earnings, which were significantly less. In this case, “Easy Vaping required Mr Hong to pay back the difference between his original salary of $22 (gross) per hour and the increased salary of $32.89 (gross) per hour.” This amounted to $13,000 over a three-year period.

Judge Obradovic found that Easy Vaping and Ms and Mr Chan engaged in conduct that was “was deliberate” “denied Mr Hong his lawful entitlements”, and “was part of a calculated strategy to disguise the unlawful conduct… deceitful and demonstrated a contemptuous disregard for workplace laws.” Like CBA’s case, Easy Vaping’s case was not heard under wage theft laws. However, unlike CBA’s case, it is reasonably safe to say that Easy Vaping did engage in wage theft.

Mischaracterisation in the media

Despite its seriousness, Easy Vaping’s case appears to have completely escaped the notice of the AFR, all other major news media outlets and even the unions. But this is unsurprising since Easy Vaping Pty Ltd isn’t a household name.

It’s not just mainstream media and unions that are happy to describe any form of underpayment as theft; even law firms are guilty of embellishing the truth for advertising purposes. Gordon Legal dropped the ‘wage theft’ bomb in its press release advertising its involvement in the 2023 class action brought by the Australian Salaried Medical Officers’ Federation against Peninsula Health for underpayments of unrostered overtime. Like the case against CBA, the words ‘theft’ and ‘stealing’ do not appear anywhere in the judgment. Law firm Supportah make the extraordinary claim that “Wage theft happens when your employer doesn’t pay you the minimum monetary amount … outlined in the agreement or award that you work under” and can “happen by mistake”.

Underpayment of workers is a serious issue. Wage theft and making false accusations of criminal behaviour are also serious issues. In the case of the latter, falsely accusing someone of committing a crime may in itself be a criminal offence. Wage theft is a crime. Unless it is deliberate and intentional, underpayment of employment entitlements is not, it is a breach of contract.