Wage theft refers to the intentional underpayment of employees’ wages.
This includes;
- not paying the correct amount for hours worked,
- not paying penalty rates,
- making unauthorised deductions,
- and failing to pay entitlements such as superannuation and leave.
The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 introduced a criminal offence for intentional underpayment of employees’ wages, which commenced on 1 January 2025.
Under the new laws, individuals face fines up to $1.56 million (or three times the amount of the underpayment, whichever is greater) or ten years in prison, while corporations will risk penalties of up to $7.825 million (or three times the amount of the underpayment, whichever is greater).
To avoid underpayments, businesses should ensure they:
- have robust payroll systems,
- conduct regular audits,
- seek legal advice,
- and maintain accurate records of employee
- entitlements.
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.
What You Need to Do:
- 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.
- Act fast: If you become aware of an underpayment and continue to pay the incorrect amount (or no amount at all), this becomes an intentional underpayment and will likely be conduct which is captured by this criminal offence.
This article provides general information only and should not be considered legal advice. If you need assistance, contact our Employment Advisory team at 1800 888 479.
