Eve-Lee Roberts, Associate
From 1 January 2025, intentional wage theft by employers is considered a criminal offence and can be prosecuted accordingly.
Changes to legislation
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 amended the Fair Work Act 2009 (Cth), by increasing maximum penalties for underpayments and introducing a criminal offence for wage theft.
What is wage theft?
Under the new provisions, employers commit an offence and can be referred for criminal prosecution if:
the employer is required to pay an amount to, or on behalf of, or for the benefit of, an employee; and
the employer intentionally engages in conduct which results in the employee not receiving that amount in full on the day that amount is due for payment.
This applies to employee entitlements arising under the Fair Work Act 2009 (Cth) and workplace instruments such as modern awards and enterprise agreements. The new wage theft provisions do not apply to solely contractual entitlements.
'Safe Haven'
Businesses can seek 'safe haven' from criminal prosecution of wage theft, in circumstances where they self-report and/or cooperate with the Fair Work Ombudsman (the Ombudsman).
Small business employers
On 16 December 2024, the Voluntary Small Business Wage Compliance Code Declaration 2024 (the Code) was lodged on the Federal Register of Legislation. The Code relates to small business employers (less than 15 employees) and provides guidelines to avoid criminal prosecution for wage theft.
Small business employers who can demonstrate they have complied with the steps set out in the Code may be protected from referral for criminal prosecution.
Non-small business employers
Non-small business employers may be able to negotiate ‘safe haven’ from criminal liability for wage theft, by proactively disclosing possible contraventions to the Ombudsman.
The Ombudsman is then able to enter into a cooperative agreement with the non-small business employer. Such agreements:
must be in writing;
set out the specific conduct of the non-small business employer which may amount to wage theft;
will include terms that require the non-small business employer to take positive steps to enable the remedying of the effects of their conduct causing the wage theft, and ensure ongoing compliance.
The new ‘cooperation agreement (CA)’ is largely analogous with ‘enforceable undertakings’ (EU), which have long been used by the Ombudsman in civil penalty proceedings. Non-small business employers elect to accept an EU in some situations, even where a CA is already in effect.
Whether or not a CA is entered into is at the discretion of the Ombudsman.
Civil vs criminal offence
Accidental underpayments will continue to be dealt with by civil action. Only intentional underpayments by small business employers will be referred for criminal prosecution.
Where ‘safe haven’ is sought by an employer, this only protects them from criminal prosecution. They are not protected from civil proceedings in relation to the conduct or the conduct being referred to the Director of Public Prosecutions or Australian Federal Police by a non-party to any safe haven agreement.
What do employers need to be aware of?
To avoid the risk of criminal prosecution, employers need to ensure:
compliance with any workplace instruments, including that employees are being paid in accordance with any applicable modern awards;
that employee wages and Superannuation contributions are being paid on time; and
that they are self-reporting any contraventions or possible contraventions to the Ombudsman to avoid potential criminal prosecution.
Small-business employers also need to ensure that they are compliant with the Code.
Key takeaways
Employers need to be mindful that they are paying employees the correct amounts and on time. There may be costly consequences, both civil and criminal, for employers who fail to comply with payment obligations.
If you are unsure if your business is compliant, believe that your business has engaged in conduct that may amount to wage theft, or require assistance negotiating safe haven agreements with the Ombudsman, please contact a member of our employment law team.
John Sneddon, Director
(07) 3307 4504
Kimberley Forman, Director
(07) 3307 4523
Ruby Nielsen, Senior Associate
(07) 3307 4551
Eve Lee-Roberts, Associate
(07) 3307 4511
Sophia Chetcuti, Lawyer
(07) 3307 4515
Comments