The Federal government's recent Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 is proposing an increase in penalties for employers who underpay their staff and also making such underpayments a criminal offence, known as wage theft.

This change commences from 1 January, 2025, but in the meantime, you should be aware that current penalties exist if you do not pay an employee the correct entitlements. This is not only wages but such provisions as not paying leave entitlements or termination entitlements in accordance with relevant workplace laws.

In a recent case the Court held that by failing to pay the annual leave entitlements, the employer and its director contravened four distinct provisions of the Fair Work Act 2009 regarding the payment of annual leave, annual leave loading, and superannuation.

With the Federal government's recent Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 proposing a fivefold increase in civil penalties for underpayment offences under the FW Act and introducing a national criminal wage theft offence, this decision is a timely reminder to employers, directors and managers of the importance of ensuring compliance with workplace laws.

To reduce the risk of an underpayment claim, employers should:

• Ensure the correct award and classification;

• Keep accurate time and wage records;

• Ensure employee entitlements on termination are paid properly and within the specific timeframes;

• Obtain advice as soon as possible if they identify an underpayment or potential underpayment; and

• Be aware that relevant managers and directors can be held personally liable and made to personally pay compensation and/or civil penalties.

If you have any questions as to what you need to pay your employees Primary Employers Tasmania can assist.