Worried about a wage underpayment issue? You should be.

Worried about a wage underpayment issue? You should be.

If your HR systems aren’t watertight, your business could be at risk of serious legal and financial consequences due to new wage theft laws that came in to effect on the 1st January 2025.


What is criminal wage theft?

Wage theft occurs when employers fail to pay employees their legal entitlements under Australia’s workplace relations system. Employers (bodies corporate or individuals) can now be criminally liable for intentionally underpaying their workers. This includes certain employee entitlements under the Fair Work Act 2009 (Cth) or a fair work legislative instrument, such as a modern award or enterprise agreement.


It can include;

  • Underpayment of salaries

  • Superannuation shortfalls

  • Unpaid penalty rates, shift allowances, or overtime

  • Missing rostered days off

  • Unpaid breaks

  • Unauthorised deductions


The Consequences of Wage Theft

The penalties for wage theft are severe:

  • Up to 10 years in prison for individuals

  • Fines up to $1.65 million for individuals

  • Fines up to $8.25 million for companies

  • A fine equal to three times the amount of the underpayment


Why Do Underpayments Happen?

One of the biggest challenges in preventing wage theft is Australia’s complex award system. With multiple pay rates, superannuation requirements, overtime allowances, and other entitlements, even well intentioned employers can make costly mistakes.

Key reasons for underpayments include:

  • Complex industrial relations laws: Many businesses struggle to navigate the intricate award system.

  • Inexperienced payroll teams: A lack of expertise can lead to errors.

  • Insufficient HR resources: Small teams may not have the capacity to manage compliance effectively.


Factors That May Affect Prosecution

Not all payroll errors result in prosecution. The government considers:

  • Intentional misconduct vs. honest mistakes: Accidental errors are less likely to be prosecuted.

  • Cooperation agreements: Employers who self report underpayments and work with the Fair Work Ombudsman (FWO) may receive more lenient treatment.

  • Employee circumstances: Factors such as classification, qualifications, hours, and location can impact legal outcomes.


How to Prevent Wage Theft & Ensure Compliance

To avoid underpayments and protect your business, take proactive steps:

  • Conduct regular payroll audits

  • Seek professional advice

  • Maintain accurate records

  • Educate your payroll and HR teams


Final Thoughts

With increasing scrutiny on wage compliance, businesses should be working to prevent underpayments and mitigate risk. Given the potential for criminal charges and multi-million dollar fines, ensuring payroll compliance should be a top priority. Find out how using a specialist HR recruiter like Samuels Donegan can help you mitigate the risk of costly reputational damage or worse.

Logo

Sarah Donegan

Managing Director

Related News & Insights


Related News & Insights


21 Mar, 2024

Diverse team celebrating success at office desk.
Diverse team celebrating success at office desk.

What's Working Right Now? Workplace Trends High-Performing Organisations Are Embracing

Not every workplace conversation is about what's broken. From clearer priorities to stronger manager capability, here's what high-performing organisations are doing differently right now.

21 Mar, 2024

high rise buildings city scape photography
high rise buildings city scape photography

The Future of Work Isn’t About Location - It’s About Trust

Victoria's proposed "right to work from home" legislation has sparked plenty of debate. But beneath the headlines lies a bigger question: have leadership, workplace culture and business practices evolved quickly enough to meet the expectations of today's workforce?

21 Mar, 2024

A yellow sign that says safe place on it
A yellow sign that says safe place on it

Why Workforce Change Is Now a Workplace Safety Issue

Are organisations giving the same attention to the human risks of change as they do the financial ones? As psychosocial safety becomes a growing focus, leaders are being asked to rethink how change is planned, communicated and managed.

21 Mar, 2024

timelapse photo of people passing the street
timelapse photo of people passing the street

When "Busy" Becomes the Default: The Hidden Cost of Operating at Capacity

Most teams are busy. The question is whether all that activity is actually creating value. We explore what happens when operating at capacity becomes business as usual, and why EOFY often exposes the cracks.

21 Mar, 2024

a man sitting at a desk with his head in his hands
a man sitting at a desk with his head in his hands

The Mid-Year Pressure Test: What EOFY Reveals About Organisations

EOFY has a way of exposing what organisations have been carrying all year. From workforce capacity and burnout to capability gaps and leadership challenges, here's what the mid-year pressure test is really revealing.

21 Mar, 2024

scrabble tiles spelling out the word leadership on a wooden surface
scrabble tiles spelling out the word leadership on a wooden surface

Five Questions Every HR Leader Should Ask Before EOFY

EOFY isn't just about budgets and headcount. It's an opportunity to step back, assess what's working, and make sure your people strategy is setting the business up for success. Before the new financial year begins, here are five questions every HR leader should be asking.

I’m a Jobseeker

Submit your CV and let's find you your perfect match.

I’m an Employer

Find your next dream hire with us.