New wage theft and underpayments laws will go into effect in January 2025 as part of the Fair Work Legislation Amendment Act 2023.
These new laws introduce the threat of significant sanctions for employers found guilty of underpaying staff, regardless of intention.
Wage theft
According to this legislation, wage theft is a new criminal charge that applies where there is an underpayment of wages, or an intent of underpayment. This is inclusive of all rightful payments to employees under the Fair Work Act 2009.
If found guilty of wage theft, employers may face up to 10 years’ imprisonment and up to 5,000 penalty units ($1.565 million) for individuals and 25,000 penalty units ($7.825m) for corporate entities.
This legislation drastically increases the consequences of underpaying employees, reinforcing the importance of good payroll practices for employers. Any failure to adhere award rates, enterprise agreements or penalties will place a business under serious risk.
Underpayments
Even where there is no evident intention for underpayment, employers can still be liable for significant financial penalties. There are many possible scenarios where employers, particularly within small entities, may unintentionally pay employees below their award rates.
It is highly recommended that business conduct thorough audits of their payroll systems and processes to ensure compliance with new legislation. Optima Partners can assist with assessing your payroll and financial records to ensure compliance.
Additionally, the Chamber of Commerce and Industry WA’s legal practice Business Law WA (BLWA) can assist with payroll audits and contract reviews. BLWA is offering a complimentary Employment Contracts and HR Document Review.
If you have any questions about underpayments, including where you have discovered an underpayment, please contact our team at BusinessLawWA@cciwa.com or (08) 9365 7746.
