As you may know, the local employment law landscape has recently undergone significant changes, particularly concerning wage theft and employer responsibilities. As of January 1, 2025, deliberate underpayment of employees (a.k.a wage theft) has been criminalised nationwide. This legislative shift is a reminder of the importance for employers to ensure accurate and timely payment of wages/entitlements.
Key facts related to new wage theft laws
- Intentional underpayment is now a criminal offence. Employers found guilty may face severe penalties, including imprisonment of up to 10 years and substantial fines. (via The Australian)
- It also carries financial penalties. Companies can be fined up to $8.25 million or three times the amount underpaid – whichever is greater. Individuals, such as business owners or directors, may face fines up to $1.65 million. (via News.com.au)
Challenges for employers
A survey by payroll software company Yellow Canary revealed that only about half of the companies in sectors like finance, telecommunications, and construction are confident in their payroll accuracy. Approximately 19% suspect they may be paying incorrectly, and 17% are unsure. This uncertainty is particularly concerning given the new legal ramifications as above. (via The Australian)
Steps employers can take to Ensure Compliance
- Conduct Payroll Audits: Regularly review payroll systems to ensure accuracy in wage calculations and adherence to relevant awards and agreements.
- Implement Robust Compliance Frameworks: Establish clear policies and procedures to manage payroll processes effectively, reducing the risk of errors.
- Leverage Technology: Utilise advanced payroll auditing tools and software to automate calculations and detect discrepancies promptly.
- Stay Informed: Keep abreast of legislative changes and updates to modern awards to ensure ongoing compliance.
Consequences of Non-Compliance
Beyond legal penalties, failing to comply with the new wage theft laws can lead to reputational damage, loss of employee trust, and potential civil litigation. The Fair Work Ombudsman estimates that Australians lose between $850 million to $1.55 billion annually due to wage theft, highlighting the widespread nature of the issue and the importance of adherence. (via News.com.au)
The criminalisation of wage theft in Australia marks a pivotal shift in employment law, emphasising the need for employers to now prioritise payroll accuracy and compliance. By taking proactive measures, businesses can safeguard against legal repercussions and contribute to a fairer workplace environment.
Feature image sourced from Pexels.