Table of Contents
Introduction
As of 1 January 2025, intentional underpayments an employee’s wages or entitlements will become a criminal offence in Australia. These laws have been introduced as a mechanism to ensure fair treatment of workers and deter non compliance within all sectors Australia wide. Underpayments may also be known as wage theft.
To support small businesses in meeting these new legal obligations, the Voluntary Small Business Wage Compliance Code has been introduced. This Code offers a clear framework for small business employers, providing guidelines on how to ensure they are paying employees correctly and avoiding unintentional breaches. By following the Code, businesses can demonstrate that they are committed to complying with the new rules, which could help protect them from criminal liability. In this article, we will explore the details of these changes, what businesses need to do to comply, and the resources available to help employers navigate this critical shift in workplace law.
What the New Criminal Penalties Mean for Employers
Starting 1 January 2025, intentionally underpaying employees will become a criminal offence in Australia, with penalties including fines and imprisonment. This shift in the law aims to tackle the ongoing issue of wage theft and ensure fairer treatment of workers. Under the new legislation, employers who deliberately underpay their staff could face criminal charges, while honest mistakes will not lead to prosecution. The government has made it clear that it will investigate suspected underpayment offences, with the potential for matters to be referred for criminal prosecution.
Employers found guilty could face severe consequences, making it crucial for businesses to ensure compliance with wage laws. The introduction of criminal penalties sends a strong message that workers’ rights must be taken seriously, and businesses must be vigilant in adhering to employment standards; the underpayments of employees must stop.
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How the Voluntary Compliance Code Can Protect Your Business
The Voluntary Small Business Wage Compliance Code (Code) provides a clear framework for small business owners to avoid the risk of criminal prosecution for underpayment. By complying with the Code, businesses can demonstrate they are taking steps to ensure they pay their employees correctly. The Code outlines key actions, such as regularly reviewing pay rates, keeping accurate records, and conducting internal audits to check for underpayment. If a business is found to have unintentionally underpaid its employees, and it can show that it has complied with the Code, it will not be referred for criminal prosecution.
The Code is designed to be practical and accessible, providing small businesses with the tools and resources they need to stay compliant. For many employers, following the Code will already align with existing good business practices. By proactively using the Code, small businesses can protect themselves from the legal risks associated with underpayment and ensure their employees are treated fairly.
Other Key Workplace Law Changes Effective from January 2025
In addition to the criminalisation of intentional underpayment, several other important workplace law changes took effect on 1 January 2025. One key change is the increase in penalties for non-small businesses found to be underpaying employees. This is part of a broader effort to address wage theft and improve compliance with employment laws across all sectors. There are also updates to certain employee classifications, particularly in industries like aged care, with new definitions and minimum pay rates coming into effect.
These changes aim to ensure fair wages for workers in sectors that have historically faced challenges in securing adequate pay. Furthermore, businesses must be aware of other changes, such as new rules regarding casual employment, a right to disconnect for employees, and new protections for independent contractors. With these ongoing reforms, it is more important than ever for employers to stay informed and ensure they are fully compliant with the evolving workplace laws.
Conclusion
As of 1 January 2025, the criminalisation of intentional underpayment marks a significant shift in Australia’s workplace laws. The introduction of the Voluntary Small Business Wage Compliance Code offers a proactive way for small businesses to avoid legal risks and demonstrate their commitment to fair pay. By staying informed and adhering to these new rules, employers can protect themselves from severe penalties and help ensure their employees are treated justly. With ongoing reforms in other areas of employment law, it is essential for businesses to keep up-to-date and implement best practices for compliance.
