Wage theft in Australia – a new era of accountabilityd

Common issues include underpayments of minimum wages, unauthorised deductions, non-payment of superannuation, and failure to comply with other award or legislative entitlements. While it has historically been a civil matter, wage theft in Australia has now entered a new chapter with the introduction of criminal penalties from 01 January 2025.

What’s changed?

• Civil penalties - remain a key enforcement mechanism, but the stakes have risen. Employers found to have underpaid employees may now be liable for the greater of either three times the value of the underpayment, or the relevant civil penalty unit associated with that contravention. 
• Serious contraventions - the threshold for “serious contraventions” has also been broadened. It now includes situations where a person or a business knew it was breaching a civil remedy provision, or they were reckless as to whether a contravention would occur. The penalties for serious contraventions have also increased. The maximum penalty for non-compliance with a compliance notice has doubled, and the maximum penalty for selected civil remedy contraventions has increased 5-fold.

Criminalisation of wage theft

While Victoria and Queensland led the way by criminalising wage theft in 2020, the federal government has now followed suit. As of 01 January 2025, under section 327A of the Fair Work Act 2009 (Cth), wage theft may constitute a criminal offence if:

• An employer was required to pay an amount:

- To an employee such as wages or paid leave entitlements; or

- On behalf of the employee, or for their benefit, such as superannuation or a salary sacrifice arrangement; and

• The employer has intentionally engaged in conduct; and 
• That conduct resulted in the amounts not being paid on or before the day they were due.

Consequences

The consequences of a criminal finding of wage theft are severe, including:

• Monetary fines of up to:

- AUD 8.25 million for companies and

- AUD 1.65 million for individuals;

• Imprisonment of up to 10 years.

Exceptions

To support small businesses, the government has introduced the Voluntary Small Business Wage Compliance Code. Businesses with fewer than 15 employees will not be referred for criminal prosecution if they have underpaid an employee and the Fair Work Ombudsman is satisfied that they have complied with the code.

What employers need to know

The message in Australia is clear: compliance is not optional. Employers must ensure they are meeting all employee payment obligations under various pieces of legislation. If you are unsure of your obligations, or if there is a risk of underpayments, seek legal advice.

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Brian Powles is a Partner at Walter Baden. He acts for employers across Australia in all areas of workplace law, including general protection applications, unfair dismissals, employment contracts, policies, breach of contract, workplace investigations, redundancy, restraint of trade, intellectual property disputes and discrimination.