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Australia's new wage theft

[Updated: 20 Jan 2025]

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Changes to underpayment of wages from 01 January 2025

A new wage theft law was introduced on 1 January 2025 criminalising the intentional underpayments to employees. Employers and payroll managers must take these changes seriously as deliberate underpayments to staff can face criminal charges, including fines and potential imprisonment for individuals responsible.

The new laws are applicable to ALL employers operating within Australia, irrespective of their size or industry. However, it is important to note that criminal charges will only be pursued if intentional underpayment can be proven. Unintentional honest mistakes, while still considered a compliance matter (is required to be back paid to employees and other penalties may be imposed), typically do not lead to criminal penalties unless there is clear evidence of deliberate misconduct.

Common payroll errors usually encountered are:

  • Not fully understanding the terms in the modern awards

  • Misclassifying employees as independent contractors

  • Not adjusting pay rates from legislative changes or award updates

  • Errors in calculating leave entitlements or penalty rates

Furthermore, to support compliance, the government has introduced the Voluntary Small Business Wage Compliance Code. This code provides guidance on how it applies to small business employers to avoid criminal prosecution for unintentional underpayments. Small businesses is refered to as an employer with fewer than 15 employees at a particular time and casual employees are not included unless engaged on a regular and systematic basis.

(Updated 20 Jan 2025)

Disclaimer: 

Information based on facts we have summarised to the above updated date. We have not considered your personal circumstances and should you wish to consider it, please seek professional advice.

 
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