Criminalising wage underpayments and other issues

Published 12 April 2024 | Updated 16 December 2024

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Criminalising intentional wage underpayments

Calendar iconThese changes start on 1 January 2025.

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.

The offence only applies to intentional underpayments that happen after these provisions take effect. This includes where they’re part of a course of conduct that started before the provisions take effect.

An employer can be an individual or a company.

We can:

  • investigate suspected criminal underpayment offences
  • 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.

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.

Exceptions

These provisions don’t apply to certain employees for:

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

Find out more at Criminal prosecution, including the penalties that may apply and exception rules.

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 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 Voluntary Small Business Wage Compliance Code (Code) has been established.

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 Code.

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

Civil penalties for wage underpayments

Calendar iconThese changes start on 1 January 2025.

The new laws increase the maximum penalty for a contravention related to an underpayment for a non-small business employer.

The new laws will mean that this maximum penalty can (in certain circumstances) be the greater of:

  • 3 times the value of the underpayment
  • the relevant penalty unit amount for the contravention.

Find out more at Litigation.

Civil penalties and serious contraventions

Calendar iconThese changes started on 27 February 2024.

The new laws:

  • increase maximum penalties that courts may impose for certain contraventions
  • introduce new threshold for ‘serious contraventions’ of the Fair Work Act.

These changes include:

  • doubling the maximum penalty for a non-compliance with a compliance notice
  • increasing the maximum penalty by 5 times for ‘selected civil remedy contraventions’ by a business with 15 or more employees.

The ‘selected civil remedy contraventions’ include breaches of:

Before the changes, a serious contravention was when a court found that the:

  • person or business knew they were contravening an obligation under workplace laws
  • contravention was part of a systematic pattern of conduct affecting one or more people.

The new laws have changed the threshold for a serious contravention. Now, a serious contravention can happen where there has been a ‘knowing or reckless’ contravention. This is instead of the previous threshold of ‘knowing and systematic’.

We’ve now updated our compliance and enforcement information to reflect the changes:

Compliance notices

Calendar iconThese changes started on 27 February 2024.

The new laws clarify how compliance notices can work in 2 ways.

The new laws now say that compliance notices we issue to employers can require the employer to:

  • calculate the underpayment amount owed to an employee
  • pay the amount owed to the employee.

The new laws also say that courts can order employers (who have been issued with a compliance notice) to comply, either wholly or partly, with its terms.

Example: Compliance notice

Aleksander runs multiple cafes. Some of Aleksander’s employees have raised concerns with us that they think they have been underpaid.

A Fair Work Inspector reviews the employees’ concerns. The Inspector believes underpayments have occurred and issues a compliance notice to Aleksander.

The compliance notice requires Aleksander to:

  • calculate the suspected underpayment amounts
  • pay those amounts to the affected employees.

Aleksander calculates the underpayments and pays the amounts owed to the employees.

We've updated our Compliance notices page to reflect the changes.

New discrimination protections

Calendar iconThis change started on 15 December 2023.

There are stronger protections against discrimination for employees experiencing family and domestic violence.

This means that it’s unlawful for an employer to take adverse action (including dismissal) against an employee because the employee is (or has been) experiencing family and domestic violence.

We’ve updated our Protection from discrimination at work page to reflect the changes.

Small business redundancy exemptions

Calendar iconThis change started on 15 December 2023.

Small business employers aren’t usually required to pay redundancy pay to employees who are made redundant.

However, a non-small business can become a small business as part of the process of downsizing its workforce. This can be due to insolvency in the period leading up to (or after) becoming:

  • bankrupt, or
  • going into liquidation.

In the past, this has meant that these employers no longer need to pay redundancy pay to employees made redundant after the business has fewer than 15 employees left.

Under the new laws, non-small business employers that become a small business employer in these circumstances may still be required to pay their employees redundancy pay.

Access our updated information:

Changes to workplace health and safety and workers compensation

There are other workplace changes as part of the Closing Loopholes laws. These include changes to workers compensation and workplace health and safety.

The changes include from:

  • 5 December 2023: expanding the functions of the Asbestos Safety and Eradication Agency to include silica
  • 15 December 2023: streamlining the Comcare workers compensation claims process for certain first responders who sustain post-traumatic stress disorder (PTSD)
  • 14 June 2024: introducing a new guide for arranging rehabilitation assessments and requiring examinations to be prepared by Comcare
  • 1 July 2024: amending the Commonwealth Work Health and Safety Act to introduce a new criminal offence for industrial manslaughter and significantly increasing penalties for other offences.

Other government bodies will be responsible for communicating about these changes, including Comcare and Safe Work Australia.

Tools and resources

Related information