As of January 1st, 2025, intentionally underpaying employees in Australia has become a serious criminal offence. This is a significant shift in the legal landscape, and employers must be aware of the implications.
What’s Changed?
The new laws introduced by Fair Work aim to crack down on wage theft and protect workers’ rights. Here’s the lowdown:
- Criminal Offences: Underpaying workers, especially if it’s intentional or systemic, can now result in criminal prosecution.
- Increased Penalties: The penalties for wage theft have been significantly increased, including hefty fines and potential imprisonment.
- Stronger Enforcement: The Fair Work Ombudsman has been given more power to investigate and prosecute wage theft cases.
- Support for Workers: The laws provide better support for underpaid workers, making it easier for them to seek justice.
What Can Employers Do?
Don’t panic! There’s a way to avoid these penalties.
- The Voluntary Small Business Wage Compliance Code provides a safety net for small businesses. This Code outlines steps to demonstrate a genuine effort to comply with wage laws.
Key Takeaways from the Code:
- It’s not a checklist. You don’t have to tick every box to be compliant.
- It focuses on overall business practices and whether you genuinely intended to pay your employees correctly.
- Common-sense business practices like keeping accurate records and training managers on wage laws are already covered.
- A Cooperation Agreement is a written agreement an employer may be eligible to enter with the FWO after engaging in conduct that may amount to the criminal underpayment offence.
Employers should consider applying for a cooperation agreement when underpayment was intentional, and they have not complied with the Code.
While the cooperation agreement is in force, the FWO cannot refer conduct outlined in that agreement for possible criminal prosecution. However, there is still the potential to initiate civil enforcement options.
Benefits of a Cooperation Agreement
- promote positive engagement and cooperation between the parties
- address intentional underpayments without the need for a criminal prosecution
- in appropriate circumstances, provide the FWO with information that can be used to investigate other persons who may have committed an offence or a related offence.
What Does This Mean for You?
If you’re a small business owner, now is the time to review your payroll practices. Make sure you’re:
- Keeping accurate records: Track hours worked, pay rates, and any deductions.
- Training managers: Ensure they understand wage laws and their responsibilities.
- Using a payroll system: This can help automate calculations and reduce errors.
Remember: These new laws clearly convey that paying employees fairly is not optional. Understanding the Code and taking proactive steps to comply can protect your business and avoid costly legal consequences.
Want to learn more? Visit the FWO website for detailed information.
Need further guidance? Contact the End2End team today on 02 8977 4002.