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Wage Theft Becomes a Criminal Offense: Are You Ready for 2025?

Writer's picture: Faye AbsalonFaye Absalon

In a landmark decision, wage theft will become a criminal offence in Australia starting in January 2025. This new legislation aims to protect workers from deliberate underpayment and strengthen employer accountability. With severe penalties introduced, businesses must ensure compliance with Fair Work requirements to avoid legal and financial risks.


What Constitutes Wage Theft?

Wage theft occurs when employers intentionally underpay workers or withhold entitlements such as superannuation, overtime, or leave. Examples include:


  • Misclassifying roles to pay lower wages.

  • Falsifying payroll records to cover up underpayment.

  • Refusing to pay legally required superannuation contributions.


Why This Matters for Employers

The penalties for wage theft reflect the seriousness of the offence:


  • For Companies

    o   Fines up to $7.825 million or three times the amount underpaid, whichever is greater.


  • For Individuals (e.g., business owners or directors)

    • Fines of up to $1.565 million or three times the underpaid amount.

    • Potential imprisonment for up to 10 years in severe cases.


Supporting Small Businesses

Understanding that small businesses may make unintentional errors, the government is introducing a Voluntary Small Business Wage Compliance Code. This code will:


  • Guide payroll management and compliance.

  • Offer a degree of protection against prosecution for honest mistakes.


However, this doesn’t remove the need to carefully review payroll practices.


Practical Steps to Stay Compliant

  1. Audit your payroll systems: Check classifications, hours worked, and entitlements to ensure employees are paid correctly.

  2. Educate your team: Train staff to understand wage laws and the importance of compliance.

  3. Keep accurate records: Transparent and organised records protect your business in case of audits or disputes.


Tip: Our team specialises in payroll compliance audits, ensuring you meet legal standards and avoid costly mistakes.


The criminalisation of wage theft reminds employers that fair pay is non-negotiable. Employers must audit existing practices and seek expert advice when needed.


If you have any questions related to the above, please do not hesitate to contact us.


Disclaimer: This article is intended to provide general guidance and is not specific advice. We encourage you to seek tailored advice for your circumstances.


 

 

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