From 1 January 2025, employers who intentionally underpay employees may be found guilty of a criminal offence.
The Fair Work Ombudsman now has the power to investigate criminal underpayment and, if necessary, refer matters for criminal prosecution. Employers who are convicted may face fines, imprisonment or both.
The maximum penalties are substantial – the greater of $495,000 (or $4,950,000 for serious contraventions) or three times the underpayment for each contravention. A serious contravention occurs if a court finds that the employer knew or was reckless as to whether they were contravening an obligation under a workplace law.
Small business employers should ensure they are familiar with the Voluntary Small Business Wage Compliance Code which can be accessed on the Fair Work website. Small business employers who have complied with the Code in relation to an underpayment will not be prosecuted.
Employers must continue to ensure they keep employee records as required under s.535 of the Fair Work Act 2009.
If you need help regarding your obligations to employees, please contact Heather Richardson.
