Wage Underpayment is Now a Crime

New wage theft laws have taken effect from 1st January 2025, making it a criminal offence for employers to intentionally underpay their employees. 

Employers are encouraged to take steps to ensure they adhere to the new regulations by: 

• Implementing reliable systems to ensure accurate processing of payroll 
• Conduct regular audits to identify and rectify potential underpayments
• Ensure that HR and Payroll personnel are well-versed in wage laws and compliance requirement pertinent to the relevant business 

The Fair Work Ombudsman can investigate suspected criminal underpayment offences and refer matters for criminal prosecution. 

If a person is convicted of a criminal offence, a court can impose fines, prison time, or both. 

You can learn more about these changes at New criminal underpayment laws have started – Fair Work Ombudsman

We suggest you make sure you and/or your HR and Payroll team understand the minimum requirements of the National Employment Standards (NES) and any Award or Registered Agreement that may apply to your business and employees. 

This includes things like: 

• Annual leave  
• Personal/carer’s leave, compassionate leave and family and domestic violence leave
• Community service leave
• Public holidays
• Superannuation contributions
• Notice of termination and redundancy pay
• Minimum pay rates for an employees’ classification in their relevant award or agreement
• Penalty rates
• When to apply overtime
• What allowances are payable 

The NES can be found at National Employment Standards

You can also subscribe to email updates regarding your relevant award at Subscribe to email updates – Fair Work Ombudsman  

What concessions exist for Small Business? 

A Voluntary Small Business Wage Compliance Code has been developed to provide protection for small business against criminal prosecution where wage underpayments were unintentional.   

A small business is a business who employs less than 15 employees. 

The Code lists factors that the Fair Work Ombudsman will consider when determining whether to forward an employer for prosecution under the new wage theft laws.   

These factors include whether the employer has: 

• Taken reasonable steps to work out correct pay rates and entitlements 
• Made reasonable effort to stay up to date with changes to their obligations, including in workplace laws
• Checked and relied on employee information the employer reasonably believed was accurate in relation to paying wages
• Sought information or advice from a reliable source about paying employee entitlements correctly
• Provided information when seeking information or advice that the employer reasonably believed was accurate 
• Taken steps to fix the underpayment
• Cooperating with any inquiry or investigation that may be conducted about the underpayment
• Other factors that might be relevant, such as what led to the underpayment or how the employer became aware of the underpayment

Download a copy of the Code and supporting guide here Voluntary Small Business Wage Compliance Code 

The Fair Work Ombudsman has also developed a guide to paying employees correctly, which can help businesses understand the code.  It offers practical advice and tools, checklist, examples and tips. 

Download a copy of the guide here Guide to paying employees correctly (PDF)   

Business of all sizes can use the code and supporting guide to ensure they are paying their employees correctly and can quickly address any issues as they rise. 

What other protections exist? 

A ‘cooperation agreement’ may be put in place by Fair Work which is a written agreement between them and an employer or payroll officer who has advised Fair Work that they have engaged in conduct that may amount to a criminal underpayment offence.  While in force, conduct outlined in that agreement cannot be referred for possible prosecution, however, civil enforcement options may still be considered if necessary. 

Download the new Guide to cooperation agreements (PDF) to learn more about this process. 

Clearly these changes are significant and the consequences extreme where intentional wage theft is found to have occurred.  We encourage all employers to be diligent in this area and take the necessary steps to avoid prosecution in this area.   

If you feel you or your payroll officer/team need an uplift in this area reach out to Beam to discuss what help can be accessed to help you get there.