Closing Loopholes Act - Criminalising Wage Theft
May 28, 2024Criminalising wage underpayments - what you need to know!
Effective from – 1 January 2025
Attention all Employers
The Closing Loopholes Act 2023 will introduce changes in terms of underpayments. From 1 January 2025, it will be a criminal offence for employer's to intentionally engage in conduct that results in underpaying their employees wages and certain entitlements.
It will be considered an ‘offence’ if Employers:
- Are required to pay an amount to an employee, such as wages and paid leave
- Are required to pay an amount on behalf or for the benefit of an employee, such as superannuation
- Engage in conduct that results in their failure to pay those amounts to or for the employee on or before the day they’re due to be paid
What penalties might apply?
If any potential or existing underpayment claims are not rectified before 1 January 2025, the offence will carry a maximum of 10 years' imprisonment, and/or a maximum fine of the greater of:
- 3 times the amount of the underpayment, if the court can determine the underpayment, or
- for an individual, $1.565 million; or for a body corporate, $7.825 million.
Who will investigate potential offences?
The Fair Work Ombudsman will be responsible for investigating any potential wage theft claims and will refer matters to the Commonwealth Director of Public Prosecutions or the Australian Federal Police for consideration and where applicable, prosecution.
What if I make a mistake with payment of wages?
Please note, these laws don’t apply to employers who unintentionally underpay their employees or pay incorrect amounts by mistake. The government will develop a Voluntary Small Business Wage Compliance Code to provide reassurance for small business employers who may have accidentally underpaid an employee and have tried to comply with their obligations.
Essential Action for Employers!
Between now and 1 January 2025 please reach out to the Employii team via [email protected], if you require assistance with any potential or existing underpayments. We are more than happy to assist!
Assessing underpayments includes:
- ensuring you have the right Award coverage
- ensuring you have the right Award classification
- ensuring you have applied the rostering rules, including penalties and overtime, as determined by the Award correctly
- ensuring you have paid base rates correctly
- ensure any flat rates or inclusive salaries have been calculated with the respect to the above and audited to ensure compliance
Alternatively, more information regarding the change can be found through the link here.
Author: Jess Roughsedge (HR Officer)
References:
Australian Government (2023) Criminalising wage underpayments and other issues, Fair Work Ombudsman, accessed 24 May 2024, https://www.fairwork.gov.au/about-us/workplace-laws/legislation-changes/closing-loopholes/criminalising-wage-underpayments-and-other-issues
Burke, T (2023) Albanese Labor Government to criminalise wage theft, Ministers Media Centre, accessed 24 May 2024, https://ministers.dewr.gov.au/burke/albanese-labor-government-criminalise-wage-theft
