Underpayment of wages - a criminal offence from 1 January 2025
Thursday, 5 December 2024
The Federal government and relevant enforcement bodies are shining the spotlight on underpayment of wage offences in Australian workplaces and turning up the heat for businesses that fail to comply with applicable laws.
From 1 January 2025, it will be a criminal offence for any employer to intentionally engage in conduct that results in the underpayment of any amount payable to, or on behalf of, an employee under the Fair Work Act 2009 (Cth) (FW Act) or an industrial instrument (including a modern award or enterprise agreement).
The new criminal wage theft offence will carry a maximum penalty of 10 years’ imprisonment and/or a maximum fine of the greater of:
- 3 times the amount of the underpayment, if the court can determine that amount; or
- for an individual, 5,000 penalty units (currently $1,565,000); or
- for a body corporate, 25,000 penalty units (currently $7,825,000).
Importantly, the criminal wage theft offence will apply to circumstances where an employer intentionally engages in conduct that results a failure to pay employees their wages, as well as other monetary entitlements payable under applicable laws, including paid leave entitlements and overtime, penalties, allowances and annual leave loading under applicable awards.
In addition to the new criminal offence, from 1 January 2025, the maximum civil penalties for contraventions of relevant provisions of the FW Act that relate to the payment of wages will increase to the greater of:
- 3 times the amount of the underpayment, if the court can determine the amount; or
- $187,800 per contravention for an individual, $939,000 per contravention for a company with less than 15 employees or $4,695,000 per contravention for a company with 15 or more employees.
It is apparent that underpayment of wages will continue to be a major focal point for relevant enforcement bodies. Last financial year, the Fair Work Ombudsman recovered approximately $473 million in unpaid wages on behalf of Australian employees and approximately $21.2 million in court-ordered civil penalties against employers and relevant individuals involved in underpayment of wage contraventions of the FW Act.
It is crucial that businesses, business owners and managers are satisfied that all employees are being paid in accordance with applicable laws, including the terms of any applicable modern award or enterprise agreement.
We have prepared a checklist to help businesses identify compliance with applicable workplace laws. If you answer “no” or “unsure” to any of the questions in the checklist, it indicates that your business may not be compliant, and exposed to legal risks in this area.
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About the authors
Stephen Schoninger is a Partner and Head of the Employment & Workplace law practice at Avant Law, based in Sydney. Stephen has over 20 years’ experience practising exclusively in employment, industrial relations and discrimination laws. Stephen is called on for his ability to plainly advise on and pragmatically apply legal principles to manage and resolve complex issues arising in the workplace. Stephen advises employers and employees in the private and public sectors on all areas of workplace law and is an experienced litigator of work-related claims. Stephen also conducts workplace investigations and delivers workplace compliance training. He regularly presents seminars on topical employment and workplace law issues.
Savanna Russo is an Senior Associate in the employment and workplace law practice at Avant Law, based in Sydney. Savanna has experience advising both employer and employee clients on all areas of employment law. She has particular experience advising small to medium businesses in a wide range of industries including allied health, banking and finance, professional services and construction. Savanna provides practical, solutions-focused advice and is known for her professional and empathetic approach.
Natasha Prasad is an Associate in the employment and workplace law practice at Avant Law, based in Sydney. Natasha has experience advising employers and employees on all aspects of employment law areas including workplace discrimination, bullying and sexual harassment, contracts of employment, termination of employment and compliance with employment regulations across various industries. Natasha is dedicated to having an empathetic approach when helping clients navigate complex workplace issues. Natasha provides clear, actionable advice tailored to her client's specific needs.
Disclaimers
The information in this article does not constitute legal advice or other professional advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of this content. The information in this article is current to 27 November 2024. Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by Avant Law Pty Limited are members of the scheme. © Avant Mutual Group Limited 2024.