From 1 January 2025, Australia introduced new criminal underpayment laws, making it illegal to intentionally underpay employees. As a business owner, understanding these changes is crucial to protect your business and maintain trust with your employees.


What’s New?

Under the new laws:

  • Intentionally underpaying wages or entitlements can result in fines, imprisonment, or both.
  • The Fair Work Ombudsman (FWO) can investigate suspected offences and refer cases for criminal prosecution.

While this crackdown targets deliberate wage theft, there are safeguards in place to help well-meaning business owners avoid trouble.

 

A Quick Case Study: Jack’s Café

Jack owns a small café in Sydney with 10 employees. After hearing about the new laws, Jack reviewed his payroll records and found that one staff member hadn’t received proper penalty rates for weekend shifts.

He corrected the underpayment, backpaid the employee, and implemented a new payroll system to prevent future mistakes. Jack also reviewed the Voluntary Small Business Wage Compliance Code, which helped him feel confident he was on the right track.

By taking these steps, Jack ensured his business remained compliant and avoided any potential issues with the FWO.


How to Protect Your Business

Here are simple steps to help you comply with the new laws:
   1. Check Your Payroll: Audit your records to ensure employees are being paid correctly, including overtime and penalty rates.
   2. Fix Any Errors: If you find underpayments, rectify them promptly. Transparency goes a long way.
   3. Understand the Code: The Voluntary Small Business Wage Compliance Code offers guidance and tools to help small  ____businesses pay employees correctly.
   4. Stay Informed: Keep up to date with wage laws to avoid unintentional mistakes.

 

Get Support When You Need It

Running a small business is demanding, and payroll compliance can be complex. If you’re unsure, you can access expert advice. My Business members can get their first call free through our Workplace Advice Line.

 

Why It Matters

The government’s focus is on targeting deliberate wage theft while supporting businesses like yours to do the right thing. By taking proactive steps now, you can safeguard your business, avoid penalties, and create a fair and positive workplace for your employees.