Wage Theft

Legislation about wage theft was introduced on 1 January, 2025 and the Fair Work Ombudsman is very active in ensuring that employees are paid correctly. New penalties mean that an employer can face fines of the greater of 3 times the amount underpaid or $8.52 million for a corporation, or $1.65 million for an individual. An individual can face up to 10 years in prison, and this includes the business owner, senior manager, payroll officer, accountant or any other person actively involved in a deliberate underpayment.

The underpayment must be intentional for penalties to apply so honest mistakes will not count as wage theft. However, penalties can still apply to ‘honest mistakes.

What’s classified as wage underpayment covers things like:

1.        Not paying sufficient wages, including penalty rates, overtime rates and/or allowances (or not paying them at all);

2.        Not paying other amounts required by the applicable award or enterprise agreement;

3.        Not paying superannuation or not paying it on time (note new Pay Day requirement that super must be in the employee’s super account within 7 days of the pay day); or  

4.        Failing to pay the amount in full either on/or before the day they’re due to be paid.

There is a Small Business Wage Compliance Code which provides that small business employers can avoid criminal prosecution if they are found to have accidentally underpaid.  Again, other penalties may apply. 

With the increase in wage rates and allowances under the recent National Wage Case it is important that you ensure your employees are paid correctly. This is particularly important if you are paying an annualised salary. You need to review the salary to ensure that over the period of the agreement the employee is paid at least the award rate of pay for all hours worked.

Contact Andrew if you think you may have a problem or need assistance.