From 1 January 2025, employers in Australia must comply with new legislation that criminalises the intentional underpayment of wages. This significant legal reform aims to deter wage theft and ensure fair treatment of employees.
Key Changes
Criminal Offence for Intentional Underpayment: Employers who deliberately underpay their staff will be committing a criminal offence. This includes any intentional failure to pay correct wages, superannuation, or other entitlements specified under the Fair Work Act.
Penalties:
Companies: Fines of up to $8.25 million.
Individuals: Fines of up to $1.65 million or imprisonment for up to 10 years.
Special Protections for Small Businesses
Recognising the unique challenges faced by small businesses, the government has introduced the Voluntary Small Business Wage Compliance Code. Compliance with this Code can shield small businesses (employer with fewer than 15 employees) from criminal prosecution, provided they demonstrate genuine efforts to meet their wage obligations.
To avoid prosecution, small businesses must adhere to the following key compliance actions:
Conduct regular reviews of payroll systems and wage rates.
Stay up-to-date with wage obligations.
Correct any identified underpayments promptly and take measures to prevent recurrence.
Maintain thorough records of wage payments and efforts to comply with legal requirements.
Civil Remedies Still Apply
Even with compliance under the Code, small businesses remain subject to civil enforcement actions. This includes:
Fair Work Ombudsman Enforcement: The FWO can issue Compliance Notices or Enforceable Undertakings for wage-related breaches.
Civil Litigation: Employees or unions can pursue civil action to recover unpaid entitlements.
It is crucial for small businesses to address compliance issues proactively to mitigate the risk of civil remedies.
How Gibson MacNeill Lawyers Can Help
Navigating changes to employment laws can be challenging, but the team at Gibson MacNeill Lawyers is here to help. We offer tailored legal support to ensure your business remains compliant and prepared. Our experienced team can assist in:
Policy and Contract Reviews: Ensuring workplace policies and employment contracts align with the new legal framework and requirements to avoid underpayment.
Internal Procedure Development: Assisting in the creation of clear processes for setting pay rates, managing wage increases, and handling employee pay concerns.
Dispute Resolution: Assisting with employment-related disputes, including sham arrangement allegations and conversion requests.
Legal Updates: We are committed to keeping our client’s updated on the new legislative changes to ensure you’re always compliant.
If you have any questions or need tailored legal support, please don’t hesitate to contact the team at Gibson MacNeill Lawyers.
Gibson MacNeill Lawyers
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