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Wage protection – new law

Date created: 01 December 2008

Applies from 1 December 2008

New laws protect Victorian employees from having money taken out of their pay unlawfully. The changes also say how employers must pay the wages. There are penalties for employers who do not follow these rules.

Payment of wages

An employer must pay an employee in money. Payments could be made in cash, cheque or money order or could be paid directly into a bank account. Employers cannot pay by giving other benefits instead – like food, beer or gambling chips.

However, it is possible for an employer and employee to agree about non-cash benefits as part of a payment package. For example, an employer may pay wages to an employee and also pay the cost of a mobile phone or work related travel expenses.

An employee can change their mind at any time if they want deductions to stop.

Deduction of wages

An employer is not allowed to take any money from an employee’s wages unless:

the employee agrees in writing or
if the deduction is allowed by a law, contract or court order.

Young people under 18

If an employee is under 18 the employee’s parent or guardian must also consent in writing for any deduction from wages for such authorisation to be valid.

Reasonable deductions

A deduction which benefits an employer will be allowed if the:

employee receives goods, services or accommodation
amount deducted is the true cost of the good/service/accommodation
and
employee has been given a choice to receive the good/service/accommodation elsewhere
or
regulations state that the deduction is reasonable.

For example, if an employee worked on a farm which was several hundred kilometres from the nearest town, the employee may arrange with his employer to live at her workplace and have the money for lodging deducted from her wages.

Unreasonable deductions

If the employer will benefit from a deduction they must let the employee know in writing.

A deduction which benefits an employer will not be allowed if the:

employee would be paid less than minimum wage as a result of the deduction
deduction is to pay for the cost of replacing the employer's property, unless the employee deliberately lost, damaged or destroyed that property
employee does not get anything in return
Regulations list the deduction as unreasonable.

For example, a restaurant forced employees to provide their own ‘floats’ before each shift and deducted money from this ‘float’ if a customer left without paying their bill. This may be unreasonable deduction. Deductions from employee’s wages to make up for a shortfall in the till may also be unreasonable.

Inconsistency with contract of employment

After 1 June 2009 this law will make any inconsistent clauses in an employment contract invalid.

Remedies

Employees can take action against an employer to get reimbursed for deductions from wages which they did not authorise.

The court may:

order that the employee be paid a specific amount as payment or reimbursement
or
impose a penalty of up to $10,000.

The employee has six years to apply to court.

Employee protections

An employer must not threaten to sack an employee’s employment or treat them unfairly just because they ask for money to be returned or ask questions about money that is being deducted.