DVA Community Nursing

From 1 January 2025, the Fair Work Wage Theft laws came into effect, making it a criminal offence to intentionally underpay employees. This change is crucial for employers to understand, as it means that businesses can now face criminal prosecution for underpayment, resulting in fines or imprisonment. However, honest mistakes in wage calculation are not included under these new laws, but intentional underpayment will be treated more severely.

The law provides protections for businesses, particularly small businesses, to avoid criminal liability. If small employers comply with the Voluntary Small Business Wage Compliance Code, they cannot be prosecuted for criminal underpayment. The Code includes practical tools, such as checklists and best practice tips, to help employers ensure they are paying employees correctly and avoid mistakes that could lead to criminal charges. Employers of all sizes are encouraged to use the Code to avoid potential issues and remain compliant.

Wage theft refers to instances where an employer is found to be intentionally underpaying its employees. Employers found guilty of wage theft may face criminal prosecution. Underpayment includes failing to pay the correct:

• wages,
• penalty rates,
• overtime,
• allowances, or
• entitlements such as superannuation as required by awards or enterprise agreements.

Small businesses are liable if they intentionally fail to pay amounts due, such as wages or superannuation, on time. This includes actions like deliberately paying less than the required amount or not paying at all.

Penalties for criminal underpayment are severe. If convicted, individuals could face up to 10 years in prison. Companies may face fines, which could be the greater of:

• three times the underpaid amount, or
• up to $8.25 million.

If the underpayment amount cannot be determined, the maximum fine for companies is $8.25 million. For individuals, if the underpayment amount is unknown, the maximum fine is $1.65 million.

The offence does not apply to genuine mistakes. In addition to the employer, anyone involved in the intentional underpayment, such as payroll managers or accountants, can also be held criminally responsible. More information on the litigation of wage theft along with the relevant civil and criminal penalties can be found here.

Providers can take several steps now to ensure they are compliant. Using the Code and the accompanying Guide will help you check that you are paying employees correctly. These resources provide clear advice, examples, and checklists. You can also make use of free tools, such as pay calculators, to ensure accurate wage payments.

Staying informed is essential. You can refer to this article for a more in depth overview of the changes are and what they mean.

The new wage theft laws are designed to hold employers accountable for intentional wage underpayment. While businesses can avoid prosecution by complying with the Voluntary Small Business Wage Compliance Code, they should take immediate action to check pay rates, familiarise themselves with the Code and Guide, and consider using cooperation agreements to mitigate risk.

To complement the above requirements, a new Modern Slavery Policy Statement has also been prepared, to align with the Modern Slavery Act 2018 (Cth), and has been provided with this update.

In addition, the Do Checklist accompanying this update provides detailed implementation steps to help you implement and ensure your compliance with workplace laws.

New and updated policies, procedures, and supporting documents should be endorsed by your business’ governing body, who should also regularly review them, considering feedback from staff and consumers.