The Federal Government is standing up for Australian workers by delivering on their promise to criminalise wage theft across the nation. If a worker steals from the till, it’s a criminal offence – as it should be. But in many parts of the country if an employer steals from a worker’s pay packet, it’s not.
It’s time to end this double standard once and for all. That’s why the Government – as part of the Closing Loopholes Bill– is making it a criminal offence to deliberately underpay workers.
The Federal Government has proposed increased penalties for employers that intentionally engage in wage theft as part of a band of reforms aimed at protecting the rights of workers. Part 14 of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 proposes the introduction of a new criminal offence for wage theft. This new offence would commence no later than 1 January 2025 and will only apply where intentional conduct is established.
What is Wage Theft?
Wage theft in this general sense refers to the unlawful withholding or underpayment of a worker’s wages and entitlements by their employer other than by purely innocent mistake. This occurrence can take various forms, including paying employees less than the minimum wage, failing to provide overtime pay, denying rest and meal breaks, and neglecting to pay superannuation contributions.
What are the penalties?[CB1]
For a company
The following penalties will apply:
- if the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $7.825 million, or
- if the court can’t determine the underpayment, $7.825 million.
For an individual
The following penalties will apply:
- maximum of 10 years in prison
- if the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $1.565 million, or
- if the court can’t determine the underpayment, $1.565 million.
The Fair Work Ombudsman will be responsible for investigating suspected underpayment offences.
How to protect your business?
Now more than ever, it is important that businesses maintain effective checks and balances against the wages that are owed to their employees.
- Regularly assess compliance with awards, agreements, and employment contracts to ensure that employee entitlements are understood and correctly applied.
- Review payroll systems and processes to ensure there are checks and balances for the correct payment (and accrual) of employee entitlements.
- Make a plan on how to respond to any queries or incidents related to underpayment so that these can be rectified before they result in litigation.
We are here to help!
We can help reduce your risk of under-paying your employees by conducting a Wage Audit. Reach out today to discuss how we can facilitate a Wage Audit in your business.
[CB1]Source: Criminalising wage underpayments and other issues – Fair Work Ombudsman
