New legislation introduced by the Australian government on 4 September 2023 will see employers who deliberately underpay their workers subject to severe penalties, including jail time and large financial penalties.

While wage theft has been a criminal office in Queensland and Victoria for a few years now, the Closing Loopholes Bill will complement these state-based laws with a consistent Australia-wide approach.

What is wage theft?

In a nutshell, wage theft is the deliberate underpayment of wages. This can involve various forms of underpayment, including:

• – Paying less than the minimum or award wage
• – Not applying the correct penalty rates
• – Not providing overtime pay where specified by an award
• – Misclassifying workers as independent contractors to avoid paying benefits

 

What does the new legislation mean for businesses?

The new legislation makes intentional wage theft a criminal offence, with employers who deliberately underpay employees facing up to 10 years’ imprisonment and fines of up to $7.8 million.

While the government has indicated that the new laws aren’t intended for honest mistakes made by employers, it’s important that stay up to date with changes to minimum wages and modern awards and have accurate payroll processes to ensure you don’t inadvertently underpay your team members.

Through the Fair Work Ombudsman, there will be a system available for employers to self-report and replay their employees if an underpayment has accidentally occurred.

Need some assistance?

This legislation is the latest of many amendments to the Fair Work Act by the government over the past twelve months. Keeping up to date with all of these changes, as well as ensuring your HR policies and payroll systems align with these new requirements isn’t easy.

That’s where the Common Goal Consulting team can help. Call Director Nikki Jenkinson on 0472 545 584 or send an email to projects@commongoalconsulting.com.au for more information on how we can support your business through our broad range of HR consultancy services.