Effective Dates:
- Wage Theft & Civil Penalties: 1 January 2025
- Superannuation Changes: 1 July 2025 and 1 July 2026
1. Criminalisation of Wage Theft
From 1 January 2025, intentional wage theft is a criminal offence under the Fair Work Act 2009 (Cth).
An employer commits a criminal offence if they intentionally underpay employees amounts owed under the Fair Work Act, a Fair Work instrument, or a transitional instrument.
Maximum penalties include:
- Companies: The greater of $8.25 million or three times the underpaid amount
- Individuals: Up to 10 years' imprisonment and/or the greater of $1.65 million or three times the underpayment
2. Increased Civil Penalties for Underpayments3>
Also effective from 1 January 2025, civil penalties for wage underpayments have been significantly increased.
For employers (excluding small business employers), the maximum penalties are now:
- Standard contraventions: 1,500 penalty units
- Serious contraventions: 15,000 penalty units
- Alternatively, the greater of the above or three times the underpayment may be applied if sought by the applicant.
3. Superannuation Guarantee Changes
(a)Increase to Super Rate - From 1 July 2025, the superannuation guarantee (SG) rate will increase from 11.5% to 12%, completing the final step of the legislated SG increases.
(b) Introduction of 'Payday Super' -- From 1 July 2026, employers must pay SG contributions at the same time as wages are paid, rather than quarterly. This reform is intended to improve visibility of entitlements and streamline compliance.
4. Recommended Employer Actions
- Review payroll systems and contracts to ensure full compliance with wage and superannuation obligations.
- Conduct wage audits to identify and rectify any potential underpayments.
- Begin preparing for Payday Super, including updating payroll processes and engaging software providers where necessary.
- Train HR and finance teams on new compliance risks, especially around the criminal implications of wage underpayment.
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.
