From 1 January 2025, employers caught short changing their workers won’t just be facing a slap on the wrist, they could be facing criminal charges. The new “wage theft offences” introduce serious penalties for those who intentionally underpay employees, with fines reaching up to $1,565,000 (or prison) for individuals and $7,825,000 or three times the underpayment amount for companies.
The Fair Work Ombudsman is leading the charge, investigating suspected cases of criminal wage theft, sending a clear message that compliance is not optional.
The payroll pitfall – deliberate or accidental?
Australia’s employment law system is a challenge, even for well-meaning employers. The risk of unintentional breaches is high, with common mistakes including misclassifying employees, overlooking entitlements and overtime, or failing to pay ‘volunteers’ who should be compensated. In our work, it is easy to see just how the complex web of rules can be overlooked or misunderstood.
But wage underpayment isn’t just a small business issue – it’s a corporate epidemic. Major brands including supermarkets, banks and retailers have faced public scrutiny and legal action over wage underpayment. Jewellery retailer Lovisa, for example, recently faced a class action from hundreds of women who claim they were forced to start early and work through lunch without pay. Whether these breaches are deliberate or accidental remains a hot topic, but a former employee summed it up bluntly:
“The whole business is built on exploiting young people.”
The price of getting it wrong
Australian Council of Trade Unions secretary Sally McManus was recently quoted as saying that “Nearly one in 10 workers are underpaid in Australia because it has been so easy for bosses to get away with wage theft.”
And there’s more bad news for employers, on 30 January 2025, Workplace Relations Minister Murray Watt released a departmental review recommending that the government reinstate the ability for courts to order businesses to pay employee’s legal costs if they are successful in an underpayment claim. However, if the employee loses, they don’t have to pay the employer’s costs.
Because of the cost of court proceedings, some employers are concerned that this will lead to a rise in paying “go away money” to avoid the time, stress and expense of having to go to court. It can be cheaper and quicker to offer a settlement to make it go away even if they believe they’ve done nothing wrong.
Final paycheck. What employers need to do
With criminal penalties now in play, it’s never been more important to audit your payroll, check entitlements, and ensure compliance. If you’re unsure, seek advice before it’s too late.
Employers who discover past mistakes should act quickly – self reporting wage theft offences can help avoid criminal prosecution, as the Fair Work Ombudsman may choose not to refer the case for charges.
Self-reporting isn’t a free pass, civil penalties can still apply. To navigate this carefully, it’s best to seek advice from your lawyer and accountant before taking action.
Curium Legal’s top tips for compliance
- Classify all of your position descriptions against the Award
- Check the Award for extra entitlements and allowances
- If you pay salaries, compare them against what would have been paid under the Award regularly
- Make sure staff complete and submit timesheets
- Make sure staff have to ask permission before working overtime
Take action now
Don’t let wage compliance become a costly mistake for your business. Contact Curium Legal today to book a Business Health Check and get practical advice on how to protect your business.
👉 Book your Business Health Check: Curium Legal, your Bendigo business lawyer.
