An underpayment of wages, salary, entitlements, superannuation or allowances, which can also be known as wage theft, happens when an employee is not paid their minimum pay rate, their correct wage, or their entitlements as stipulated by the National Employment Standards (NES), modern award or enterprise agreement.
This can sometimes be an innocent mistake or a miscalculation made by an employer or their payroll, if they made an error in calculating the hours worked, entitlements or overtime rates of an employee.
If however, the underpayment was not done by mistake this could be a serious contravention of the law and penalties may apply. Worklawyers is skilled at recovering underpayments on behalf of clients and has had significant success in doing so over the years.
The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 amends the Fair Work Act 2009 and a new criminal offence will be introduced for intentional underpayment of employees’ wages and entitlements. This new law will come into effect on the later of 1 January 2025, or when the Fair Work Commission’s Voluntary Small Business Wage Compliance Code starts.
It is a criminal offence if an employer is found to have intentionally engaged in conduct which results in an underpayment of their employee. This includes the underpayment of wages as well as superannuation contributions if they are related to an employee’s entitlements under the Fair Work Act 2009, a modern award or an enterprise agreement.
If an employer is found to have committed an underpayment offence, a maximum penalty of 10 years’ imprisonment and/or a maximum fine of whichever is greater – three times the amount of the underpayment, or $1,565,000 (for an individual) or $7,825,000 (for a body corporate) will apply.
The Fair Work Ombudsman will be primarily responsible for investigating the new criminal offence, but it will also have the power to refer matters to the Commonwealth Director of Public Prosecutions or the Australian Federal Police for consideration and prosecution if they regard it as appropriate.
The new wage theft offence will not apply retrospectively, meaning the law will only apply to offences committed after the new law comes into force. Once that occurs there is a time limit of 6 years (after the offence occurred), to bring an action against an employer.
If you would like to know more about how this new law will apply to you or if you have experienced an underpayment, please get in contact with us – your first phone call will always be free.