Wage Theft Now a Reality

From 1 January 2025, new laws came into effect whereby an employer intentionally underpaying employees' wages or entitlements can be found guilty of a criminal offence under the Fair Work Legislation Amendment (Closing Loopholes) Act 2023.

The penalties are severe—

• For Individuals: Up to 10 years' imprisonment or fines of up to $1.565 million.

• For Companies: Fines of up to $7.825 million or three times the amount underpaid, whichever is greater.

Therefore, it is important to ensure that you are paying your employees correctly. These laws apply to all Australian employers, regardless of size or industry. Employers managing large or complex payroll systems, particularly those employing temporary visa holders or shift workers, must pay special attention to compliance.

However, for small businesses, additional safeguards are provided under the “Voluntary Small Business Wage Compliance Code”.

To comply with the code the employer must:

• Make sure your employees are correctly classified under the relevant award.

• Make sure you are applying the correct wage rate, overtime penalties, loadings and allowances.

• Keep accurate employee records, hours of work, leave entitlements, etc.

• If an underpayment occurs, act immediately to rectify the issue.

• Consult with experts for guidance.

The legislation is aimed at intentional and deliberate actions that result in employees being underpaid. If there is a genuine error, and the employer acts quickly to rectify the error then they will not be prosecuted.

The time to act is now. By preparing early, businesses can avoid severe penalties, protect their reputation, and foster trust with their workforce.

Primary Employers Tasmania can assist with your payroll queries.