Wage Theft Is Now a Crime in Australia: What Employers Need to Know

From 1 January 2025, intentionally underpaying workers became a criminal offence under Australian federal law. The changes, introduced by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth), represent one of the most significant shifts in employment law in years. If you employ people in Australia, you need to understand what this means for your business. For background on employee rights, see our guide to unfair dismissal in Victoria.

What Is Wage Theft?

Wage theft, in the legal sense, refers to the deliberate underpayment of wages, superannuation, allowances, or other entitlements that an employee is owed. Under the new criminal laws, it is the intent to underpay that triggers criminal liability, not simply getting the numbers wrong.

Honest mistakes and genuine payroll errors are not criminal offences. The law is directed at employers who knowingly pay workers less than they are entitled to receive.

What Are the Penalties?

The penalties for criminal wage theft are serious.

For Individuals

An individual, such as a business owner or payroll manager, who is found guilty of intentional wage theft can face up to 10 years imprisonment and fines of up to $1.65 million.

For Corporations

A corporation found guilty of wage theft can face fines of up to $8.25 million.

These are among the most severe employment law penalties in Australian history and reflect the seriousness with which Parliament is treating deliberate underpayment.

The Role of the Fair Work Ombudsman

The Fair Work Ombudsman (FWO) is responsible for investigating and enforcing compliance with workplace laws, including the new criminal wage theft provisions. The FWO has significantly increased its compliance and enforcement activity in recent years.

Importantly, the FWO has indicated that employers who voluntarily disclose underpayments and cooperate with investigations may receive more favourable treatment than those who do not come forward. If you have identified a potential underpayment issue in your business, early and transparent action is strongly advisable.

What Employers Should Do Now

Even if you are confident your payroll is correct, the new laws make this a good time to review your practices. Steps worth taking include:

• Conducting a payroll audit to check that all employees are being paid correctly under their employment contracts and applicable Modern Awards
• Reviewing employment contracts to make sure they reflect current obligations
• Checking that superannuation is being calculated and paid on time and in full
• Training payroll staff on award obligations and any recent changes
• Seeking legal advice promptly if you identify any underpayments, so you can understand your exposure and the best way to address the issue

Civil Claims Still Apply

The criminal wage theft laws operate alongside existing civil remedies. Employees can still make underpayment claims through the Fair Work Commission regardless of whether a criminal investigation is under way. This means the financial and reputational consequences of underpayment can compound quickly.

Get Legal Advice

If you are an employer with concerns about your payroll practices, or if you have received a complaint from an employee, getting legal advice early is the best thing you can do. Contact Professional Edge Lawyers to speak with an employment law solicitor. We can help you review your obligations, respond to a complaint, or work through the process of making a voluntary disclosure.