Australia introduces criminal penalties for wage theft starting January 2025

As of 1 January 2025, the Albanese Government's employment law reforms reached a significant milestone, with intentional wage underpayment or wage theft now classified as a criminal offence punishable by substantial fines or imprisonment.

By Ro Elvinia

Wage theft occurs when an employer deliberately underpays an employee with intent to withhold wages. The penalties for such offences are severe:

  • If the underpayment amount can be determined, offenders face the greater of three times the underpayment or $7.825 million.
  • If the underpayment cannot be quantified, offenders are liable for a $7.825 million fine.

The Fair Work Ombudsman (FWO), an independent statutory body in Australia that enforces compliance with the Fair Work Act 2009 and related employment laws, has strongly emphasised that intentional underpayment will not be tolerated. It has warned employers to prioritise compliance, particularly with new legislation designed to enhance protections for vulnerable workers, boost productivity and foster secure, well-paid jobs.

According to the FWO, wage underpayment often stems from:

  • Failing to keep pace with regulatory and award changes.
  • Inadequate investment in payroll systems, leading to integration issues.
  • Poor governance and reliance on manual processes or individuals.

Accountants Daily, an Australian online publication providing daily breaking news, analysis and insights to accounting professionals, recently reported on the growing risks employers face under new laws. The article emphasised that outdated payroll systems significantly contribute to errors and compliance failures, with 71 per cent of human resource and finance professionals relying on up to five separate tools for payroll management. It underscored the critical need for businesses to adopt robust payroll practices in 2025.

ABN Australia, a trusted local payroll and compliance expert, offers tailored payroll and tax solutions to help international businesses navigate Australia’s complex regulatory landscape. With cutting-edge cloud technology, ABN Australia ensures international employers remain compliant with local employment and superannuation laws while delivering accurate and timely employee payments.

Contact ABN Australia today to safeguard your international business and streamline payroll management.

Published: 21st Jan 2025 | Last updated: 21st Jan 2025