Wage Theft In Australia - What Employees Need To Know Before 2025

Sep 12

As of January 2, 2025, wage theft will officially become a criminal offence in Australia, marking a significant shift in the legal landscape for employers. This change underscores the importance of understanding what constitutes wage theft, the implications for businesses, and the steps employers must take to ensure compliance with the law.

What Constitutes Wage Theft?

Wage theft occurs when an employer intentionally withholds or underpays the required amount under the Fair Work Act 2009. This can include failing to pay the correct overtime rates, not paying for all hours worked, or withholding entitlements. While accidental underpayment due to administrative errors or miscalculation is not considered wage theft under the new laws, deliberate actions – or inactions – that result in employees being underpaid will be subject to criminal penalties.

It is crucial to understand that the offence applies only to intentional underpayments. This means that for an employer to be found guilty, there must be evidence that they deliberately chose not to pay the required amounts or were aware that underpayment would occur as a result of their actions. The law is designed to target those who exploit workers by denying them their rightful pay, rather than penalising those who make genuine mistakes.

Penalties

Companies found guilty of wage theft may be required to pay the greater of three times the amount of the underpayment or a fine of up to $7.825 million. For individuals, including company directors, the penalties are equally harsh, with a maximum of 10 years in prison and fines of up to $1.565 million or three times the underpayment amount. These penalties are intended to act as a strong deterrent, ensuring that employers take their obligations seriously.

Exemptions

There are some exemptions under the new laws, which are important for employers to be aware of.

The offence of wage theft does not apply to certain employees for: