GLOBAL PAYROLL MAGAZINE
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Australia’s new wage theft laws take effect on 1 January 2025. These laws are set to make a major change to the way underpayments are viewed in Australia. It’s going to be a criminal offence to intentionally underpay someone. As gatekeepers to the payment of workers, payroll professionals will be at the forefront of ensuring compliance with the new laws.
When introducing the new legislation, the Minister for Employment and Workplace Relations said ‘If a worker steals from the till, it’s a criminal offence – as it should be. But in many parts of the country, if an employer steals from a worker’s pay packet, it’s not. It’s time to end this double standard once and for all.’ So how exactly do the new laws intend to achieve this, and what does this mean for payroll professionals? What do the laws say? The laws will make it a criminal offence for an employer to intentionally underpay its employees their entitlements under the Fair Work Act or an industrial instrument, and for some employees, this will extend to non-payment of superannuation and long service leave entitlements. The penalties for breaching the provisions are significant. Where a breach is proven, companies could face fines of up to $7.825 million, and individuals could face up to 10 years in prison and fines of up to $1.565 million.
Complying with the laws is going to be important for Australian businesses, and everyone who has a hand in the payment of workers will have a role to play in compliance. What does ‘intentional’ underpayment mean? An underpayment will be taken to be intentional if the employer: means to engage in conduct; and means for that conduct to result in a failure to pay the required amount to, or for the benefit of, the employee in full on or before the day when the required amount is due for payment, or is aware that this will occur in the ordinary course of events.
This is a high bar and will mostly only catch deliberate underpayments.
However, when it comes to attributing intention to a company, a wider range of considerations will come into play. Until now, the Fair Work Act has provided that the state of mind, or the intention, of an officer, employee or
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