Beyond Penalties: How Australia’s Wage Theft Laws Are Reshaping Corporate Responsibilities 

The impending federal wage theft laws in Australia represent a pivotal shift in the accountability and responsibility of employers regarding wage compliance. These laws, marking a significant departure from the past, will criminalize intentional underpayment of workers, with penalties extending up to 10 years in prison for the most serious offenses. What’s particularly noteworthy is the proactive stance companies must now adopt; it’s no longer viable to plead ignorance or delegate responsibility solely to payroll departments. 

Wage Theft is Here!  

The essence of these laws lies in their application of the Criminal Code Act 1995 (Cth), which establishes corporate liability not just for direct actions but also for failing to foster a “corporate culture” that prioritises compliance. This means a company’s leadership can be held criminally responsible if they are found to have explicitly or implicitly authorised underpayment, or if the organisation’s culture is found to encourage or tolerate non-compliance. 

Given the broad scope of these regulations, which aim to ensure systematic measures are in place to prevent wage underpayment, employers face an issue that requires immediate and diligent attention. The definition of “corporate culture” as it pertains to these laws is particularly broad, encompassing:   

  • attitudes,  
  • policies,  
  • rules,  
  • conduct, or  
  • practices  

within a company that should collectively work towards ensuring wage compliance. 

5 Steps for Employers 

To navigate this regulatory landscape, employers should begin preparations well ahead of the law’s implementation post-January 1, 2025 (the laws are already in place in Victoria and Queensland). Establishing and maintaining a corporate culture of wage compliance is paramount and involves several foundational steps: 

  1. Wage Compliance Strategy: A strategy should outline the measures an Employer will implement to guarantee compliance, detailing responsibilities, processes for determining employee entitlements, calculation accuracy, audit practices, and rectification processes.  In particular very careful consideration should be given to how payroll officers and managers deal with any suspected wage compliance issues and the accountability required to go merely beyond processing but also any potential illegality.  This may well require management training.  
  1. Determining Employee Entitlements: Employers must accurately identify applicable awards or agreements for every role and ensure correct role classifications.  Modern award mapping can be difficult and time consuming, external legal advice may be required to give definitive legal advice on award coverage especially in non traditional industries or roles.  
  1. Ensuring Sufficient Annualised Salaries: For roles with all-inclusive annual salaries, employers need to conduct regular reviews to ensure these salaries meet minimum entitlements and that any contractual offset mechanisms are correctly drafted. 
  1. Accurate Pay Rules in Payroll Software: The pay rules must reflect the true entitlements under the applicable awards or agreements, requiring regular updates to align with changes in award rates or benefits.  The team at NB Employment Law have been regularly engaged to review these pay rates to ensure there is less over reliance on what a software is simply telling them.  This can be quite manual but will give definitive advice on the true nature of wage compliance.  
  1. Conducting Ongoing Compliance Audits: Regular audits are crucial for early detection and rectification of any discrepancies or errors in pay.  A sample wage audit is a good way to start which keeps initial costs down but gives an Employer a snapshot of any potential problems.  

By taking these proactive steps, employers can start building a robust framework for wage compliance, mitigating the risks associated with the new wage theft laws. This approach not only helps in avoiding severe penalties but also reinforces a company’s commitment to fair and ethical treatment of its workforce. 

Wage Theft is Different to Underpayment of Wages  

To be clear, there is a stark difference between underpayment of wages and wage theft.  

Wage theft is a criminal sanction and can land those held responsible in jail.  Underpayment of wages is limited to civil penalties.  

Queensland and Victoria Wage Theft Laws  

Queensland and Victoria already have wage theft laws in place.  

At present, wage theft legislation has been passed exclusively in Queensland and Victoria. In Queensland, employers found intentionally underpaying their employees could face imprisonment for up to 10 years. Meanwhile, in Victoria, employers who dishonestly withhold employee entitlements may be subjected to penalties up to $1 million and imprisonment for up to 10 years. 

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Written By   

Jonathan Mamaril   


NB Employment Law   

[email protected]   

+61 (07) 3876 5111