Criminalizing Wage Theft
All employees must be aware of the changes around underpayments resulting in intentional wage theft.
From 1 January 2025, intentionally underpaying an employee is a criminal offence under the Fair Work Act 2009 and the penalties are significant.
Fines and prison time
If a person is convicted of a criminal offence, a court may impose fines, prison time, or both.
For a company, the maximum fine is up to $8.25 million.
For an individual, a maximum of 10 years in prison or a maximum fine up to $1.65 million may be imposed.
Protection for small businesses?
Small businesses (a business that employs 15 people or less) that may have engaged in wage theft will not be referred for criminal prosecution if they can show compliance with the new Voluntary Small Business Wage Compliance Code. However, the Fair Work Ombudsman can still take civil action such as issuing a Compliance Notice, an Enforceable Undertaking, or being fined by court.
How to be protected by the Code?
The Fair Work Ombudsman will assess several factors provided in the Code to determine if the employer has intentionally underpaid their employees including checking if the employer is paying their employees correctly, staying up to date with minimum pay increases or legislative updates, promptly paying back workers after finding out about the underpayment and ensuring the underpayment doesn’t happen again.
Checklist to make sure your employees are being paid correctly:
Check the relevant award or enterprise agreement otherwise confirm if the National Minimum Wage Order applies.
Provide all required information on pay slips and follow record-keeping obligations
Stay up to date with workplace laws, including checking for updates every July when minimum pay rates increase.
Provide correct information about an employee to an employer association, or industrial professionals, such as lawyers or industrial relations consultants while seeking information on correctly paying employee entitlements.
Take steps to fix any underpayment issues immediately such as promptly paying back the employees soon, understanding how the underpayment occurred, and taking appropriate steps to prevent the same issue from happening again in the future.
Cooperation agreements
An employer who self-reports misconduct on underpayment can request to enter into an agreement with Fair Work Ombudsman known as the cooperation agreement. This stops Fair Work Ombudsman from referring any conduct specified in that agreement for possible criminal prosecution.
This article is general in nature and is not legal advice. If you need help dealing with underpayments, or another employment law matter, or require assistance with updating your workplace contracts, procedures and policies, Voice Lawyers can assist you.
We help people navigate the complexities of the Fair Work Act and workplace laws with confident, practical advice. You can contact us at office@voicelawyers.com, or give us a call at 02 9261 1954 or use the link on our website to book a consultation to speak with one of our lawyers.
By Kayte Lewis and Tabitha Reji