The new laws will apply to employers who intentionally engage in conduct that results in the underpayment of their employees from January this year (2025) in Australia.
APPLIES TO
» Entitlements – Wages, Award or Enterprise Agreements, Personal or Annual Leave
» Superannuation (in some cases)
» Misclassifying employees as independent contractors
» Pay for Trial or Training
EXCLUDES
» Some Superannuation contributions;
» Long Service Leave
» Leave for Jury Duty, Emergency Services Duties and being a victim of a crime.
PROOF, PROCESS & EXEMPTIONS
» Criminal – Commonwealth: Employers – refers to companies and individuals involved in decision-making that results in wage theft (i.e. directors, managers, employees).
» Proof beyond reasonable doubt that the employer knowingly and deliberately withheld payments and entitlements past the due date despite being aware of its obligation and requirement to pay them (except for payments exempt under the legislation).
» Fair Work Ombudsman (FWO) will investigate and refer serious cases to Cth Dir of Public Prosection or AFP.
» Small Businesses (employing 15 or fewer people) that comply with the Voluntary Compliance Code may be shielded – https://www.fairwork.gov.au/about-us/compliance-and-enforcement/criminal-prosecution/voluntary-small-business-wage-compliance-code
PENALTIES – COMPANIES
» Up to $7.825 million or three times the underpayment amount (whichever is
greater).
PENALTIES – INDIVIDUALS
» Up to 10 years imprisonment.
» If the underpayment is not determinable – $1.565 million
» If the underpayment is determinable – $1,565 million or three times the underpayment (whichever is greater).
* Self-reporting suspected wage theft to the FWO may shield from criminal liabilitiy but not civil recovery and penalty action.
CULTURE IS CRITICAL
A company can be deemed complicit if the corporate culture is
» Indifferent; or
» Tolerates, enables or fails to actively prevent wage theft; or
» If underpayment is suspected but ignored or left unaddressed (not taking reasonable steps to ensure compliance)
Even if practices are unintentional.
NEXT STEPS
Small Businesses – get acquainted and comply with the Voluntary Compliance Code. Regardless of size, take these three key steps
1. Training for directors, management, payroll and accounts personnel on compliance obligations
2. Maintain accurate records, timely payment schedules and conduct regular audits
3. Build a company culture of compliance and commitment to fair and lawful engagement of people through policies and procedures that are lived and championed.
