Compliance Alert: There have been changes to the Fair Work Act as part of the new Closing Loopholes laws.
Effective 1 January 2025, intentional underpayment of wages is a criminal offence in all jurisdictions of Australia.
The financial penalties for criminal underpayment are severe and can include up to 10 years in prison.
Small businesses (less than 15 employees) are protected from criminal prosecution if they follow the Voluntary Small Business Wage Compliance Code guidelines.
What You Can Do
Underpayments often happen because of a mistake or payroll error. This short article explains how to fix an underpayment: Overpayment and underpayment of wages >
To manage your payroll compliance, it’s important to:
Review your payroll transactions and award classifications regularly.
Review your HR protocols and train your HR and payroll teams whenever employment laws change.
Follow the Fair Work Ombudsman’s guide to paying employees correctly, including the Voluntary Small Business Wage Compliance Code.
How WorkPlacePLUS Can Help
Employees must be paid at least their minimum pay rates and entitlements. To support you in this area, WorkPlacePLUS offers:
✓ Payroll compliance reviews
✓ PD and classification reviews
✓ Comprehensive SCHADS Know Your Award training
✓ Customised Know Your EBA training
Managing your payroll compliance doesn’t have to be an annoyance to tackle on your own. WorkPlacePLUS is here to support you with tailored payroll compliance solutions.
For more information, please contact us today.
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Victorian News
On 1 July 2021, it became a crime for an employer in Victoria to:
deliberately underpay employees
dishonestly withhold wages, superannuation or other employee entitlements
falsify employee entitlement records to gain a financial advantage
avoid keeping employee entitlement records to gain a financial advantage
These crimes are punishable by a fine of up to $218,088 or up to 10 years’ jail for individuals and a fine of up to $1,090,440 for companies.
The offences apply to employers and to ‘officers’ of that employer. Which roles are considered ‘officers’ depends on the entity type of the employer, but it generally applies to roles that have significant decision-making responsibilities within a business, such as:
directors
office holders
partners
people who may make substantial business decisions on behalf of the employer
Wage theft offences involve deliberate and dishonest conduct. Honest mistakes made by employers who exercise due diligence in paying wages and entitlements are not considered wage theft.
Employers must provide their employees with at least the minimum pay and conditions outlined in the relevant award, workplace agreement, contract of employment or legislation and keep employee entitlement records.
Victoria’s wage theft laws don’t impose new record-keeping obligations on employers. Various pieces of legislation already require employers to keep employee entitlement records, including about allowances, annual leave and long service leave. The wage theft laws make it a crime to deliberately falsify these records or fail to keep them to gain a financial advantage or prevent the exposure of a financial advantage.
Download the Wage theft - employer fact sheet >
If you have underpaid an employee, you should fix this as soon as possible.
For more information or tailored assistance, please contact us today.