New Criminal Underpayment Laws Have Started

From 1 January 2025, intentionally underpaying an employee’s wages or entitlements can be a criminal offence.  This doesn’t include honest mistakes.

If you are a business owner then it is important that you are complying with your requirements to pay your employees correctly.

From 1 January 2025, intentional underpayment of wages or entitlements can be a criminal offence.

The Fair Work Ombudsman can now investigate suspected criminal underpayment offences and refer suitable matters for criminal prosecution.  If a person is convicted of a criminal offence, a court can impose fines, prison time, or both.

There is a Voluntary Small Business Wage Compliance Code available here:  Voluntary Small Business Wage Compliance Code – Fair Work Ombudsman

If you are a small business then you should review this code as the Fair Work Ombudsman cannot refer a small business employer for criminal prosecution if they are satisfied that they have complied with the Code.

There is also the ability to enter into a cooperation agreement which is a written agreement between an employer and the Fair Work Ombudsman entered into when an employer tells the Fair Work Ombudsman that they have engaged in conduct that may amount to the criminal underpayment offence.  While that is in force the Fair Work Ombudsman can’t refer conduct that is outlined in that agreement for possible criminal prosecution.

In light of these changes, you should:-

1. Check your employment agreements and pay rates to ensure that you are paying employees correctly including all applicable loadings or allowances and penalty rates or overtime.
2. If you are a small business, read the Code referred to above to ensure compliance.
3. Review your processes and procedures to ensure that you keep up to date with changes to applicable legislation, modern awards and employee’s circumstances.