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VICTORIAN WORKERS' WAGE PROTECTION BILL 2007

  Victorian Workers' Wages Protection
               Bill 2007

                        Introduction Print

              EXPLANATORY MEMORANDUM


                              Clause Notes

                      PART 1--PRELIMINARY
Clause 1   provides that the purposes of the Bill are to ensure that employers
           pay employees their wages in money and to set out the method of
           that payment, to regulate the ability of employers to make
           deductions from employees' wages, to provide for enforcement
           mechanisms and remedies where there have been breaches of
           these requirements and to amend the Public Sector (Union Fees)
           Act 1992 and the Outworkers (Improved Protection) Act
           2003.

Clause 2   sets out the Bill's commencement date. The Bill comes into
           operation on a day to be proclaimed or, if not proclaimed before
           1 December 2008, it comes into operation on that day.

Clause 3   defines key terms used in the Bill.
           Subclause (1) includes the following definitions--
           deduction means any amount of an employee's wages that is not
           paid by an employer to the employee and includes (but is not
           limited to) any amount withheld by the employer or paid to
           another person, pursuant to a salary sacrifice arrangement or
           otherwise;
           employee and employer are defined, respectively, to include
           former and prospective employees and employers;




561133                               1     BILL LA INTRODUCTION 10/10/2007

 


 

industrial instrument is defined as an award, agreement or standard that is given effect to or continued in effect by the Commonwealth legislation and is applicable to a Victorian employer and one or more employees or to Victorian employers and employees (and Commonwealth legislation and award are separately defined); multiple deduction is defined as a type of deduction that is recurring; person includes a body (whether or not incorporated), and body includes a partnership and a trust; wages is defined as the amount to which an employee is entitled in respect of services performed by the employee, and may include (but is not limited to) any salary, income, allowances, overtime payments, leave payments, termination payments, bonuses and commissions, but does not include payments in kind or the value of payments in kind that are an agreed part of the employee's remuneration package (e.g. provision of a car for private use). Subclause (2) further clarifies the definition of domestic partner in subclause (1). Subclause (3) provides that a deduction is not to be taken to be for the direct or indirect benefit of an employer or a related party of an employer merely because it includes a reasonable administrative processing charge. Clause 4 sets out who is a related party for the purposes of the Bill. This is relevant to the requirements that apply to the making of deductions, set out in clauses 7, 8 and 9. A related party includes any person who holds or will hold a relevant financial interest or exercise any relevant power in the employer's business such that the person is or will be able to exercise significant influence over or with respect to the business, an executive officer of the business, a relative (as defined) of the employer or of a related party or persons prescribed by regulation to be a related party. The regulations may also prescribe persons not to be a related party of the employer for the purpose of the Bill. Example The spouse of a director of the employer's business is a related party of the employer. Clause 5 provides that the Bill binds the Crown in the right of Victoria and, so far as is permitted, the Crown in all its other capacities. 2

 


 

PART 2--DEDUCTIONS AND PAYMENT OF WAGES Clause 6 sets out the requirements for the payment of employees' wages. Clause 7 then sets out the circumstances in which deductions can lawfully be made from wages. Subclause (1) provides that an employer must pay to an employee all of the employee's wages in money. Therefore, wages should not be paid, in whole or in part, 'in kind' through the provision of goods or services. However, due to the definition of wages, this will not prevent an employer and an employee from negotiating non-cash benefits as part of their remuneration package and the employer then providing the agreed goods or services as part payment in respect of services performed by the employee. Example An employer and an employee may agree that the employee will be paid wages of $700 gross per week and, as part of his or her remuneration package, have the benefit of a vehicle and a mobile phone provided by the company for business and for private use. Subclause (2) specifies the different methods by which wages may be paid in money (which may be by one or a combination of these methods), such as by deposit into authorised deposit-taking institutions. Subclause (3) makes clear that the section does not affect the making of deductions from an employee's wages in accordance with this Part. Clause 7 sets out when deductions from wages may be lawfully made. Deduction is defined in clause 3 to include any amounts not paid to the employee, whether withheld by the employer or paid to another person, and includes deductions made in accordance with salary sacrifice arrangements. Subclause (1) provides that an employer must not make any deductions from an employee's wages unless-- · the employer has received a valid written authorisation from the employee to make the deduction, the deduction is made in accordance with that authorisation and, where relevant, the notice requirements in clause 7(2) have been complied with; or · the employer is required or authorised by a law, court order or industrial instrument to make the deduction. 3

 


 

Examples of such laws include sections 2.4.29 and 2.4.35 of the Education and Training Reform Act 2006 and section 24 of the Parliamentary Administration Act 2005. Subclause (2) provides that, where the deduction is initiated by the employer or is for direct or indirect benefit of the employer or a related party of the employer, the employee must first have been advised in writing of the details of the proposed deduction including the reason for the proposed deduction, the identity of the person in whose favour the proposed deduction is to be made, (subject to clause 8) the amount of the deduction, whether the deduction is to be a single or multiple deduction, and the period and frequency of the deduction(s). Subclause (3) provides that the requirements of subclause (2) will not apply to any prescribed type of deduction. Subclause (4) enables an employee to withdraw, in writing, an authorisation to make a deduction at any time and the employer must stop making the deduction as soon as practicable after receiving this notification. Subclause (5) provides that nothing in the Bill requires an employer to make a deduction requested by an employee, where they are not otherwise required by law, court order or industrial instrument to do so. Subclause (6) provides that the clause does not apply to a deduction made under section 56 of the Financial Management Act 1994 or section 26 of the Parliamentary Administration Act 2005. These sections empower the State as an employer to make deductions to recover overpayments. Clause 8 sets out the requirements of a written authorisation to make deductions. Subclause (1) provides that employees may authorise their employers, in writing, to make single or multiple deductions or both single and multiple deductions from their wages to specified persons, for specified periods, at specified frequencies, and commencing from a specified date or occasion. Subclause (2) provides that the amount of each proposed deduction must be specified in the written authorisation, and any variation must be authorised in writing. Therefore, where any changes in the amount of a multiple deduction are known in advance, this may be set out in the original written authorisation. 4

 


 

Subclause (3) provides that subclause (2) does not apply to prescribed deductions or where the deduction is to be paid to an unrelated third party (i.e. is not for the direct or indirect benefit of the employer or a related party of the employer). In those circumstances, the employee may give a standing authorisation to the employer to make deductions of an amount as varied from time to time. Clause 9 sets out circumstances in which a deduction is taken not to be authorised. Subclause (1) provides that a written authorisation is of no effect where-- · it was obtained as a result of duress or coercion on the part of the employer or was not otherwise freely given by the employee; Example An authorisation may not have been freely given where the employee was subject to undue pressure by the employer, through repeated and forceful requests to consent to the deduction, having regard to the age and relative negotiating strengths of the parties. · the employee is under the age of 18 years and the authorisation has not been consented to by the employee's parent or guardian. · the deduction is for the direct or indirect benefit of the employer or a related party of the employer, and the deduction is unreasonable in all of the circumstances. Subclauses (2) and (3) provide examples of where deductions may be considered unreasonable or reasonable in all of the circumstances. The clause does not otherwise specify when a deduction may be considered unreasonable in all of the circumstances. For example, a relevant consideration in a particular case could include the relationship between the employment and the reason for the deduction, such as where the proposed deduction relates to reimbursement to the employer of uniform costs--where the employer requires the employee to wear specific clothing in the performance of their work or protective clothing is required for occupational health and safety reasons. 5

 


 

Subclause (2) provides that a deduction for the direct or indirect benefit of an employer or a related party of an employer may be unreasonable in all the circumstances if-- · it would result in the employee being paid less than the applicable minimum (unless this is authorised by law, court order or industrial instrument); or · it relates to the cost of replacing any clothing, equipment or other property provided to the employee which is lost, damaged or destroyed by the employee, unless this was intentionally caused or arose from the employee's wilful neglect; or · no consideration is provided by the employer for the deduction; or · it is of a type prescribed by the regulations as a deduction that may be unreasonable. Subclause (3) provides that a deduction for the direct or indirect benefit of an employer or a related party of an employer may be reasonable if-- · the deduction is in respect of the provision of goods, services or accommodation to the employee by or on behalf of the employer or a related party of the employer, and-- · the amount of the deduction is specified; and · the amount is a direct and proper reflection of the actual cost of the goods, services or accommodation in respect of which the deduction is being made; and · if practicable, the employer or related party has given the employee an opportunity to obtain the same or similar goods, services or accommodation elsewhere; or · it is of a type prescribed by the regulations as a deduction that may be reasonable in all of the circumstances. Subclause (4) makes clear that the examples in subclauses (2) and (3) are not intended to limit the operation of subclause (1)(c). 6

 


 

Clause 10 Subclause (1) defines relevant terms in the clause including relevant employee as an employee who holds or is an applicant for a subclass 457 Business (Long Stay) visa, or any other prescribed employee or class of employee. Subclause (2) provides that an employer must not deduct any amount from a relevant employee's wages (even with the employee's consent)-- · for or in respect of any fee, cost or other payment payable in relation to the provision of an employment placement service for or on behalf of that employer or employee; or · that represents the cost of any goods, services or accommodation provided to or for the benefit of that employee, that the employer is required to pay for by law. Once the Commonwealth's Migration Amendment (Sponsorship Obligations) Bill 2007 becomes law, this will prohibit deductions that relate to-- · any fees that must be paid for the 457 visa holder to work in the nominated activity/employment area such as licence or registration fees; · costs associated with recruiting the 457 visa holder; · costs of any migration agent involved with the 457 visa holder's visa application; · relevant fees and costs required by that Bill to be paid in respect of the 457 visa holder's family. PART 3--ENFORCEMENT AND REMEDIES Clause 11 Subclause (1) provides that any term of a contract or agreement (other than an industrial instrument) is void to the extent that it is contrary to or inconsistent with anything in the Bill or regulations made under the Bill or purports to exclude the Bill or its regulations. Subclause (2), however, provides that any such contrary or inconsistent provision will prevail over the Bill in its first six months of operation, and subclause (3) defines commencement day for the purposes of that clause. 7

 


 

Clause 12 Subclause (1) provides that-- · the employee; or · at the request of the employee or group of employees, an organisation of which the employee is a member or eligible to be a member; or · the Minister for Industrial Relations; or · a person authorised by the Minister-- may apply to a court where there has been a breach of clause 6, 7, 10 or 20. Subclause (2) enables the court to impose a civil penalty of up to $10 000 for each breach found, and may make an order of payment of an amount reimbursing the employee. An employee or his or her representative could elect to seek recovery of any wages not paid in money or amount unlawfully deducted, without seeking the imposition of a penalty. Subclause (3) makes it clear that a breach of clause 6, 7, 10 or 20 is not an offence. Subclause (4) provides that the court may, in its discretion, order that the penalty, or a part of the penalty, be paid to a particular person or organisation or into the Consolidated Fund. Subclause (5) provides that in making an order for payment to the employee, the court may take into account any benefit that the employee has or will receive from the employer relating to the breach. Subclause (6) makes clear that imposing a penalty should be taken, for the purposes of enforcement, to be an order made by the court in a civil proceeding. Subclause (7) provides that a proceeding against an unincorporated body may be taken in the name of an executive officer of the body. Clause 13 Subclause (1) requires that a written demand for payment of any wages not paid in full in money is first served on the employer by or on behalf of the employee before an application is made to court, unless this is not practicable. Subclause (2) requires that a written demand for payment of any amount unlawfully deducted is first served on the employer by or on behalf of the employee before an application is made to court, unless this is not practicable. 8

 


 

This may be relevant to the court's determination under clause 18 as to whether interest should be payable by an employer on an amount ordered by the court to be paid to an employee. Clause 14 sets out the service requirements in respect of a written demand made under clause 13. Clause 15 Subclause (1) provides that an application to a court must be brought within 6 years of the breach occurring (the entitlement to the payment of wages arising or the unlawful deduction occurring). Subclause (2) provides that where application is made to the Magistrates' Court, only the Industrial Division has jurisdiction to deal with the proceeding. Clause 16 Subclause (1) empowers the Minister to authorise the Secretary of the Department of Innovation, Industry and Regional Development or departmental officers to make an application under clause 12. Subclause (2) provides that an authorisation must be in writing, can be general or specific, and may be revoked at any time. Subclause (3) makes clear that the revocation of an authorisation does not affect any proceedings commenced before the revocation unless the notice of revocation states otherwise. Clause 17 Subclause (1) confers a limited discretion on a court to award costs in respect of a proceeding, where the applicant has instituted the proceeding vexatiously or without reasonable cause, or where a party has caused the other party to incur costs because of an unreasonable act or omission. Subclause (2) provides that subclause (1) does not empower a court to award costs where the court does not otherwise have such power. Subclause (3) defines costs to include all legal and professional costs and disbursements. Clause 18 sets out when interest may be payable by an employer. Subclause (1) provides that where the court is satisfied that the employer had reasonable notice of the claim (of breach of clause 6, 7 or 10) and had no reasonable grounds on which to dispute the claim and therefore should have paid the employee without the need for court proceedings, the court may order the employer to pay interest. 9

 


 

Subclause (2) provides that interest payable must not exceed the rate fixed by the Penalty Interest Rates Act 1983. Clause 19 provides that an employer is not entitled to recover any payment in kind in breach of Part 2 (that is, alleged payment or part- payment by way of provision of goods or services). However, under clause 12 a court may take into account any benefit received by the employee from the employer when making orders. Clause 20 Subclause (1) provides that an employer must not terminate or threaten to terminate or alter the position of an employee to the employee's prejudice because the employee is entitled to or seeks to exercise any entitlement or other right under the Bill. Subclause (2) provides that a breach may occur even if the reason mentioned in subclause (1) for the employer's conduct is not the only reason. Clause 21 provides that the conduct of executive officers, employees or agents of an incorporated body may be imputed to the body. Clause 22 Subclause (1) provides that the conduct of an incorporated body may be imputed to an executive officer of the body where the executive officer knew about or was reckless as to whether the conduct was engaged in. Subclause (2) makes clear that this does not entitle an employee to recover more than the amount the subject of the alleged breach, pursuant to an order under clause 12(2)(b). Subclause (3) provides that interest is to be disregarded when considering the overall amount recovered for the purposes of subclause (2). Clause 23 Subclause (1) provides that where application is made in respect of a contravention of clause 6 and the affected employee is dead, there is a reversal of the evidentiary onus in any proceedings such that an employer bears the onus of presenting evidence that the payment in kind was duly authorised and did not form part of the employee's wages. Subclause (2) provides that where application is made in respect of a contravention of clause 7 or 10 and the affected employee is dead, there is a reversal of the evidentiary onus in any proceedings such that an employer bears the onus of presenting evidence that the deduction from wages was lawful. 10

 


 

PART 4--GENERAL Clause 24 Subclause (1) enables the Governor in Council to make regulations for or with respect to-- · prescribing persons or classes of persons to be (or not be) a related party in relation to an employer; · prescribing types of deductions for the purposes of clause 7(3) or 8(3)(b); · prescribing types of deductions as deductions that may or may not be reasonable in all of the circumstances; · prescribing persons or classes of persons to be a relevant employee for the purposes of clause 10; · prescribing any other matter or thing required or permitted by this Bill to be prescribed or necessary to be prescribed to give effect to the Bill. Subclause (2) states that the regulations may be of general or limited application, and may differ according to differences in time, place or circumstances. Subclause (3) provides that regulations made under the Bill may be made-- · so as to confer a discretionary authority or impose a duty on a specified person or class of person; or · so as to provide in a specified case or class of case for the exemption of a class of person from any of the clauses of the Bill or the regulations, whether conditionally or otherwise and whether wholly or to a specified extent. Clause 25 sets out the Bill's transitional arrangements. Subclause (1) provides that any agreement authorising or purporting to authorise deductions from wages that does not comply with the Bill ceases to have effect 6 months after commencement of the Bill. Therefore, any non-compliant authorisations will need to be re-made prior to that time in order for any continuing deductions to be lawful. This is consistent with the time frame set out in clause 11(2). Subclause (2) provides that the Bill does not affect any proceedings commenced or concluded before the commencement of the Bill. 11

 


 

PART 5--AMENDMENT OF OTHER ACTS Clause 26 amends the Public Sector (Union Fees) Act 1992 to require that public sector union fee deductions must also comply with the requirements of the Bill. Clause 27 amends the Outworkers (Improved Protection) Act 2003 to provide that an outworker is an employee for the purposes of the Bill. 12

 


 

 


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