Criminal prosecution

From 1 January 2025, we can investigate and refer suspected criminal underpayment offences for possible prosecution.

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The information on this page applies from 1 January 2025

Criminal offence

From 1 January 2025, intentional underpayment of wages or entitlements can be a criminal offence. This doesn’t include honest mistakes.

An employer may commit a criminal offence where they:

  • were required to pay an amount:
    • to an employee such as wages or paid leave entitlements
    • on behalf of the employee, or for their benefit, such as superannuation or a salary sacrifice arrangement
  • have intentionally done something that intentionally results in those amounts not being paid on or before the day they were due.

Intentional conduct includes:

  • taking an action, such as paying less than an employee’s minimum entitlements on purpose. For example, not paying the correct hourly rate or other entitlements such as penalty rates, overtime and allowances
  • failing to take an action, such as not paying an employee on purpose.

Example: Intentional underpayment of wages

An employer paid an employee $12 per hour, knowing it was below the minimum wage. This meant the employer deliberately failed to pay their employee correctly. Because the employer’s actions were intentional, the underpayment could be a criminal offence.

An employer can be an individual or a company.

We can:

  • investigate suspected criminal underpayment offences
  • if we consider there is sufficient evidence, refer suitable matters to the Commonwealth Director of Public Prosecutions or the Australian Federal Police for consideration and possible criminal prosecution.

Prosecution can result in monetary fines, prison time, or both.

As well as employers, other individuals or companies can also be prosecuted for their conduct relating to an offence, such as aiding an employer in committing the offence.

Exceptions

The criminal offence provisions don’t apply to all entitlements for certain employees. This broadly includes:

  • employees in New South Wales, South Australia, Queensland, Tasmania and Victoria who are employed by sole traders, partnerships, other unincorporated entities, or non-trading corporations
  • most Victorian state government employees
  • Tasmanian local government employees.

Find out more about state referred businesses.

For these employees, the criminal offence provisions don’t apply for:

  • superannuation contributions
  • payment for taking long service leave
  • payment for taking leave connected with being the victim of a crime
  • payment for taking jury duty leave or for emergency services duties.

The criminal offence provisions apply to other wages and entitlements for these employees.

Cooperation agreements

An employer who has voluntarily told us about their conduct that could be a criminal offence can seek to enter into a written cooperation agreement with us. This stops us referring any conduct specified in that agreement for possible criminal prosecution. We may still take other enforcement action, such as starting civil litigation.

Learn more about cooperation agreements, including when and how they’re used and how to apply for one at Cooperation agreements.

Voluntary Small Business Wage Compliance Code

A small business employer can’t be referred for criminal prosecution by us if:

  • they’ve underpaid an employee
  • we’re satisfied that they’ve complied with the Voluntary Small Business Wage Compliance Code (the Code).

Learn more and download the Code at Voluntary Small Business Wage Compliance Code.

Tip – Help for small business employers to understand the code

Download our Guide to paying employees correctly and the Voluntary Small Business Wage Compliance CodeGuide to paying employees correctly and the Voluntary Small Business Wage Compliance Code to:

  • help pay employees correctly
  • understand how the Code applies.

The Guide offers practical advice and tools including a checklist, case studies and best practice tips.

Referring matters for criminal prosecution

Our decision to refer matters for possible criminal prosecution will depend on whether we have enough evidence and whether it’s in the public interest. Our Compliance and Enforcement Policy Compliance and Enforcement Policy outlines the factors we will consider in more detail.

The Commonwealth Director of Public Prosecutions and the Australian Federal Police are the only bodies that can initiate legal proceedings for a criminal offence.

Fines and prison time

If a person is convicted of a criminal offence, a court may impose fines, prison time, or both.

For a company

If the court can determine the amount of the employer’s underpayment, the maximum fine will be the higher of:

  • 3 times the amount of the underpayment
  • $8.25 million.

If the court can’t determine the amount of the underpayment, the maximum fine is $8.25 million.

For an individual

The court can impose a maximum of 10 years in prison or a fine, or both.

If the court can determine the amount of the employer’s underpayment, the maximum fine will be the higher of:

  • 3 times the amount of the underpayment
  • $1.65 million.

If the court can’t determine the underpayment, the maximum fine is $1.65 million.

Source reference: Fair Work Legislation Amendment (Closing Loopholes) Act 2023 ss 327A, 327B, 717A, 717B

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