Businesses are recommended to keep on top of a legislative change that makes it a criminal offence to intentionally underpay staff wages, superannuation and other entitlements when they are due.
The change, which came into effect on 1 January 2025, allows the Fair Work Ombudsman (FWO) to investigate suspected criminal underpayment offences, otherwise known as wage theft, and refer these to the Commonwealth Director of Public Prosecutions or police for possible legal action.
The Australian Payroll Association says the change elevates the seriousness of wage underpayment, sending a strong message to businesses that deliberate non-compliance will no longer be tolerated.
Non-compliant businesses face monetary fines, prison time or both. They also risk reputational damage and the loss of trust of their employees and customers.
The legislative change gives government bodies such as the FWO and state regulators enhanced resources and authority to investigate wage theft claims.
It also allows employers who voluntarily disclose their intentional underpayments to enter into a written cooperation agreement with the FWO to prevent the organisation from referring them for possible criminal prosecution. The FWO, however, may still take other enforcement actions against them, such as starting litigation.
At the same time, workers who come forward with wage theft claims are protected from retaliation or unfair dismissal.
Running a company and delivering payroll can be stressful on its own, but there are some simple strategies business owners can employ to maintain compliance.
Keep up to date
Ensure you have the latest details on minimum wages or award/enterprise agreements that apply to your employees. Changes to these usually begin on the first full pay period on or after 1 July. Remember that misinterpretations of awards are a common cause of underpayment problems.
Use the FWO’s guide to paying employees correctly and adopt its Voluntary Small Business Wage Compliance Code if you have fewer than 15 employees. Also, make use of FWO’s updates on social media or via email.
You can find up-to-date minimum pay rates at Fair Work Australia. Check that your employees are correctly classified under the award/enterprise agreements. Understand what can affect their pay rates and entitlements, such as qualifications, age, location, duties and hours of work.
If you employ an apprentice or trainee, ensure you know your obligations under their training contracts. Stay abreast with changes to the law that arise from decisions from courts.
Invest in processes and record-keeping
Invest in systems to ensure compliance. These should integrate rosters, time and attendance, payroll and contracts. Ensure your software is updated regularly to account for legal changes.
Implement efficient and accurate timekeeping processes and maintain records of time worked and entitlements accrued. Document everything. Detailed records are crucial if you get audited or investigated.
Regularly review your systems, processes and employee records to ensure all entitlements are paid correctly and you are compliant.
Provide pay slips within one working day of pay day. Include all required information on pay slips.
Get help
Seek advice from workplace experts such as employer associations or unions, industrial professionals and payroll associations if you need it.
Speak to your lender or broker if you need assistance optimising your cash flow and managing cost pressures from rising wages and the legislative change.
Fix issues quickly
Ensure you take reasonable steps to address any underpayments quickly. These include repaying the employee as soon as possible and understanding how the underpayment happened. See fairwork.gov.au/how-to-fix-an-underpayment.
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