New Wage Theft Laws
Important changes to workplace laws regarding underpayment of wages came into effect on 1 January 2025
From 1 January 2025, deliberate underpayment of wages is deemed a criminal offence, and it’s essential to understand how these laws apply and the steps you can take to remain compliant.
What Do the New Laws Mean?
From 1 January 2025, any intentional underpayment of wages, superannuation, or entitlements can lead to criminal penalties, including fines and potential prosecution: If a person is convicted of a criminal offence, a court may impose a maximum of 10 years in prison for an individual. They can also impose significant penalties for the individual or a company, or both.
Maximum Penalty for a Company
If the court can determine the underpayment amount, the maximum penalty will be the greater of: 3 times the underpayment amount OR $8,250,000. If the court can’t determine the underpayment amount, the maximum penalty is $8,250,000.
Maximum Penalty for an Individual
If a court can determine the underpayment amount, the maximum penalty will be the greater of: 3 times the underpayment amount OR $1,650.000. If the court can’t determine the underpayment amount, the maximum penalty is $1,650.000.
Intentional conduct includes:
- Purposefully paying less than the required minimum.
- Failing to act, such as deliberately not paying an employee.
Note: The criminal offence does not apply for underpayments that happen because of a genuine mistake but they must be corrected promptly.
How Can Small Businesses Stay Compliant?
To assist small businesses, the Fair Work Ombudsman has introduced the Voluntary Small Business Wage Compliance Code. This code provides practical steps to ensure employees are paid correctly. Importantly, small businesses that follow the Code and make an error will not be referred for criminal prosecution.
Please Note: Even if an employer has complied with the Code, civil actions such as issuing a compliance notice or an enforceable undertaking may still be taken, and civil penalties may still apply.
To ensure compliance, ACFA recommends the following steps:
1. Follow Your Pay Slip and Record-Keeping Obligations
- Provide pay slips within one working day of payday.
- Ensure pay slips include all required information, such as hours worked, pay rates, and deductions.
- Keep accurate, accessible, and legible records of time worked and wages paid.
2. Stay Up to Date with Workplace Laws
- Stay informed by subscribing to and regularly reading the ACFA Member Bulletins, which provide updates on key topics such as minimum wage increases, award classifications, and workplace laws.
- Make adjustments promptly on any of these changes.
3. Get Help If You Need It
- Seek advice from ACFA’s Workplace Advice Team for award rate information and compliance guidance.
- Use ACFA member resources, including FAQs and checklists, to simplify payroll and record-keeping processes.
4. Address Issues Quickly
- If an underpayment is identified, act promptly by:
- Correcting the error and back-paying employees.
- Identifying the cause to prevent future occurrences.
- Communicating transparently with affected employees about the resolution.
Resources to assist members have been loaded to the ACFA Member Portal including FAQs explaining the new laws, a checklist to help assess compliance and a Fact Sheet on how to fix an underpayment.
ACFA Workplace Advisory Team
1300 342 248
