As of 1 January 2025, intentionally underpaying an employee’s wages or entitlements can be prosecuted as a criminal offence Australia-wide. Wage theft occurs when an employer fails to pay workers the full wages, entitlements, or superannuation that they are legally owed. It can take various forms, from unpaid overtime and minimum wage violations to misclassification of workers and unlawful deductions.
Key features of the new law
Under the new federal legislation, employers found guilty of intentionally underpaying or withholding wages from their employees can face significant criminal penalties, including fines and/or imprisonment. The law applies to employers who engage in deliberate wage theft and those who fail to rectify the situation when it is brought to their attention. The law will apply to scenarios, such as:
- Underpayment of minimum wages: Employers who fail to pay employees at least the minimum wage set out in modern awards or enterprise agreements.
- Failure to pay entitlements: Including overtime, annual leave, sick leave, and superannuation contributions.
- Misclassification of workers: Employers wrongly classify employees as independent contractors to avoid paying the appropriate wages and benefits.
- Illegal deductions: Making unlawful deductions from an employee’s pay for things like uniforms, equipment, or cash handling fees.
Suitable matters may be referred to the Commonwealth Director of Public Prosecutions or the Australian Federal Police for consideration and possible criminal prosecution. The decision to refer matters for criminal prosecution will depend on whether there is enough evidence and whether there is a public interest.
An employer who has voluntarily come forward about their conduct that could be considered a criminal offence can seek to enter into a written cooperation agreement. This stops the referring of any conduct specified in that agreement for criminal prosecution.
Employees will also have access to a streamlined complaints process that can help resolve issues faster than before.
The impact on employers
For employers, this legislation brings about the need for greater diligence in ensuring all employees are paid according to the law. Businesses will need to thoroughly review their payroll systems and practices to ensure compliance with wage laws, especially those in industries where wage theft has been most rampant.
While the criminalisation of wage theft could be seen as a challenge for businesses, it is also an opportunity to build trust with employees and foster stronger workplace culture. Employers who maintain fair pay practices are likely to attract and retain top talent, improve morale, and enhance their reputation in the market. In fact, many businesses already implementing transparent pay practices have seen positive impacts on employee engagement and retention.
How Business Chamber Queensland can help
Employers can contact Business Chamber Queensland for advice and assistance in reviewing payroll systems and practices.
