New criminal underpayment laws came into force on January 1, 2025, following the registration of the Voluntary Small Business Wage Compliance Code.
The Code provides small business employers with a clear pathway to avoid criminal prosecution for the new wage theft offence. The Code and its explanatory statement can be viewed online at the Federal Register of Legislation.
While there is no intention to prosecute people for honest mistakes, intentionally underpaying an employee’s wages or entitlements may result in criminal charges.
The new offence will apply to employers who intentionally engage in conduct that results in the underpayment of their employees. It will apply to employee entitlements under the Fair Work Act 2009 or a fair work instrument (such as a modern award or enterprise agreement), including superannuation in some circumstances.
The Commonwealth Fair Work Ombudsman says they can investigate suspected criminal underpayment offences and refer suitable matters for criminal prosecution. If an employer is convicted of a criminal offence, a court can impose fines, prison time, or both.
However, the Ombudsman can’t refer a small business employer’s conduct for possible criminal prosecution if they are satisfied that the employer complied with the Code in relation to an underpayment.
The Voluntary Small Business Wage Compliance Code and supporting materials are available on the Fair Work Ombudsman’s website.
