Previously, the consequences of intentional wage theft attracted only civil penalties if an employer was found guilty of such deliberate conduct.  

However, amendments to the Fair Work Act last year mean that from 1 January 2025, employers who intentionally underpay their employees may now face criminal charges.  

These new laws are in addition to the existing legislative framework dealing with underpayment related matters. This article reviews the new wage theft laws and provide steps employers can take within their business. 

What is considered an offence? 

Essentially, the new laws mean an employer will commit an offence if: 

• They are required to pay an amount to an employee under the Fair Work Act or an industrial instrument such as an Award or enterprise agreement; and 

• They intentionally engage in conduct resulting in a failure to pay these amounts to the employee on or before the due date. 

Establishing guilt 

The intention of a body corporate may be established by: 

• Proving the board of directors intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence; or 

• Proving a senior manager intentionally, knowingly or recklessly engaged in the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence; or 

• Proving that a corporate culture existed within the body corporate that directed, encouraged, tolerated or led to non-compliance with wage and entitlements legislation laws; or 

• Proving that the body corporate failed to create and maintain a corporate culture that required compliance with wage and entitlements laws (unless it can prove it exercised due diligence to prevent the conduct). 

For a person to be guilty as an accessory: 

1. Their conduct must have in fact aided, abetted, counselled or procured the commission of the offence by the other person; and 

2. The offence must have been committed by the other person; and 

3. The person must have intended that: 

(a) their conduct would aid, abet, counsel or procure the commission of the offence; or 

(b) their conduct would aid, abet, counsel or procure the commission of the offence and was reckless about the commission of the offence. 

The Fair Work Ombudsman will continue to investigate wage theft issues. However, the prosecution of offences under the Criminal Code Act will be handled by the Director of Public Prosecutions or the Australian Federal Police, with cases assessed based against the criminal standard of ‘beyond reasonable doubt’. 

Penalties 

Under the new laws a company found to have committed ‘wage theft’ will be subject to a fine of up to $7.825 million or three times the amount of the underpayment. For individuals who engage in intentional wage theft, the offence will carry a maximum of up to 10 years’ imprisonment and/or a maximum fine of the greater of either $1.565M or three times the amount of the underpayment. 

Practical actions for businesses  

There are practical steps employers can take to mitigate the risk of wage theft, including: 

• Ensure all statutory entitlements are paid, and when they are due 

• Regularly review payslips and payroll systems for compliance 

• Ensure employee records are accurate and up to date 

• Seek advice if you are unsure about obligations 

• Train boards and management about the importance of paying employee wages and other statutory entitlements 

• Create and maintain a corporate culture that requires compliance with wage and entitlements laws 

• Exercise due diligence to prevent non-compliance with wage and entitlements laws. 

Key takeaways 

Compliance with the complexities of the workplace relations system is challenging and underpayments can and do happen. These new laws do not seek to criminally prosecute accidental, unintentional, or honest mistakes, but rather seek to prosecute deliberate actions by companies and individuals.  

If an employer becomes aware they are underpaying employees, they should act immediately to address the issue and make any necessary payments to the affected employees. They should also get advice on whether they should self-report to the Fair Work Ombudsman. 

This article is of a general nature and guidance only and does not constitute legal advice. 

Charles Watson is general manager – IR, policy, and governance at the Visual Media Association 

This article first appeared in the February issue of ProPrint magazine. Read the original article here.

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