The Federal Government’s “Closing the Loopholes” legislation has taken a significant step by criminalising employers’ intentional underpayment of wages.
Starting from January 2025, employers will be committing an offence if they intentionally fail to pay amounts due to employees, such as wages or superannuation, under the Fair Work Act or an industrial instrument.
Critical Points for Employers:
- The Fair Work Ombudsman will investigate suspected underpayment offences.
- Courts will determine penalties for violations.
- Maximum penalties for companies can be either three times the amount of the underpayment or $7.825 million, whichever is greater. If the underpayment amount cannot be determined, the penalty will be $7.825 million.
- Individuals found guilty can face up to 10 years in prison and fines of either three times the amount of the underpayment or $1.565 million, whichever is greater. If the underpayment amount cannot be determined, the penalty will be $1.565 million.
Implications for Employers:
The new offence targets underpayments occurring after the legislation takes effect, including ongoing issues from before the change. To prevent criminal charges, employers should:
- Conduct audits on awards and classifications.
- Assess the reality and nature of all employment arrangements.
- Guarantee all employee entitlements under the relevant award or agreement are met and documented.
Protect Your Business:
Maintaining compliance with wage regulations is essential. Regular audits and reviews are crucial to identifying and resolving issues early and safeguarding your business from legal problems.
Need Assistance?
If you have any uncertainties about award coverage, worker classification, or pay entitlements, Business 360 is here to support you. Contact us at 1300 287 360 or email info@business360.au. To schedule a meeting for a confidential discussion, scan or click the link below. We’re committed to helping your business stay compliant and well-prepared for these changes
