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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
