Federal criminal offence of wage theft commenced 1 January 2025
From 1 January 2025, employers who intentionally engage in conduct which results in underpaying certain employee entitlements may commit the federal criminal offence of wage theft.
Section 327A of the Fair Work Act 2009 (Cth) (Fair Work Act) was introduced as part of the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth). It provides that an employer will commit wage theft if they:
- are required to pay an amount to an employee (e.g. wages, allowances, leave entitlements) or on behalf of an employee (e.g. superannuation contributions) in accordance with the Fair Work Act or a fair work instrument (with some exceptions) (Required Amount); and
- intentionally do or do not do something that results in a failure to pay the Required Amount in full on or before the day the Requirement Amount is due for payment.
Notably, section 327A will only apply to conduct that occurred after it came into effect (i.e. from 1 January 2025).
Intention
The criminal offence of wage theft targets the intentional underpayments of wages and entitlements to staff. Accidental underpayments of wages, entitlements and benefits are not captured by the offence. To successfully prosecute criminal wage theft, the prosecutor must establish, beyond reasonable doubt, that the employer:
- intentionally engaged in the conduct in question; and
- intended that conduct would result in failing to pay a Required Amount in full on or before the day the payment as required to be made.
Related offences
The actions of other individuals and corporations can also be captured under related offence provisions in circumstances where they have attempted to commit wage theft; have incited, aided, abetted, counselled or procured the commission of wage theft; or entered into an agreement to commit wage theft.
Compliance and penalties
The Fair Work Ombudsman (FWO) will generally be responsible for conducting investigations into allegations of wage theft. Subject to the FWO’s discretion, it may refer matters to the Australian Federal Police or Commonwealth Director of Public Prosecutions (CDPP), or enter into cooperation agreements with employers.
The maximum penalties for the offence of wage theft or related offences are:
- For individuals:
a. imprisonment of 10 years; and/or
b. if the underpayment amount can be calculated, either $1.65 million or 3 times the underpayment
amount, whichever is greater. - For corporate or Commonwealth entities:
a. if the underpayment amount can be calculated, either $8.25 million or 3 times the underpayment
amount, whichever is greater; or
b. if the underpayment amount cannot be calculated, $8.25 million.
Civil penalties
The criminal offence of wage theft does not replace civil penalties for underpaying staff (such as the compulsory superannuation guarantee). This means that individuals, unions and the FWO may still take civil action against employers in relation to the same conduct that is captured by the federal criminal offence of wage theft.
Small businesses
The Voluntary Small Business Wage Compliance Code (accessible here) has been created to assist small businesses (i.e. businesses with fewer than 15 employees) to meet their obligations in respect of wage theft. The FWO cannot refer small businesses who have complied with the Code to the CDPP for prosecution.
How Justitia can help
The team at Justitia can assist employers to properly understand their obligations to ensure they pay wages and entitlements to their staff correctly and on time. Get in touch with our friendly team if you need a hand to navigate the complex world of staff wages and entitlements.