From 1 January 2025, significant changes to workplace laws will make wage theft a criminal offence across Australia. The information below provides an overview of what these changes are and how members can prepare and implement any necessary changes before this date.
What is Wage Theft?
Wage theft refers to the intentional underpayment of employees’ wages or other entitlements. This includes not paying the correct amount for hours worked, not paying penalty rates, overtime or allowances, making unauthorised deductions, and failing to correctly pay entitlements such as superannuation and leave.
What is Changing?
From 1 January 2025, intentionally underpaying an employee’s wages or entitlements will be a criminal offence. This doesn’t include honest mistakes or businesses acting in good faith.
The upcoming laws introduce the following harsher penalties:
- individuals will face fines up to $1.56 million (or three times the amount of the underpayment, whichever is greater) or ten years in prison
corporations will risk penalties of up to $7.825 million (or three times the amount of the underpayment, whichever is greater).
Safe Harbour Provision
There are protections in place for businesses to avoid criminal prosecution. This includes the Voluntary Small Business Wage Compliance Code and cooperation agreements entered with Fair Work Ombudsman. Visit the FWO for more info.
Prepare for 1 January 2025 Changes
To avoid unintentional underpayments, businesses should ensure they understand what needs to be paid to workers, have robust payroll systems, conduct regular audits, seek legal advice, and maintain accurate records of employee entitlements.
Start implementing measures now to align with the new requirements.
- Understand your obligations: Ensure you are familiar with the industrial instrument which sets out minimum rates of pay. These rates can be found in the applicable award or enterprise agreement.
- Maintain Accurate Records: Ensure your payroll and record-keeping systems are up to date and comply with all relevant obligations.
- Provide Timely and Correct Payments: Regularly review employee entitlements and payments to avoid underpayment.
Need Help?
Download checklist for auditing for underpayments
Download our checklist to help you prepare for the upcoming changes, or for more info please reach out to our employment advisory team on 1800 888 479 or submit an online enquiry here.
