Criminalising wage underpayments and other issues

Last updated 12 April 2024

Intentionally underpaying employees can be a criminal offence.

Understand when this new offence applies and about exceptions and penalties.

Criminalising intentional wage underpayments

Calendar iconThese changes won't start before 1 January 2025.

As part of changes to workplace laws, intentional underpayment of wages by employers will become a criminal offence.

Employers will commit an offence if:

  • they’re required to pay an amount to an employee (such as wages), or on behalf of or for the benefit of an employee (such as superannuation) under the Fair Work Act, or an industrial instrument
  • they intentionally 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.
The new offence only applies to intentional underpayments that happen after these provisions take effect. This includes where they’re part of a course of conduct that started before the provisions take effect.

Exceptions

These provisions don’t apply to certain employees for:

  • superannuation contributions
  • payment for taking long service leave payments
  • payment for taking leave connected with being the victim of a crime
  • payment for taking jury duty leave or for emergency services duties.

These laws also don’t apply to employers who:

  • unintentionally underpay their employees, or
  • pay incorrect amounts by mistake.

Penalties

For a company

The following penalties will apply:

  • if the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $7.825 million, or
  • if the court can’t determine the underpayment, $7.825 million.

For an individual

The following penalties will apply:

  • maximum of 10 years in prison
  • if the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $1.565 million, or
  • if the court can’t determine the underpayment, $1.565 million.

We (the Fair Work Ombudsman) will be responsible for investigating suspected underpayment offences.

Voluntary Small Business Wage Compliance Code

A Voluntary Small Business Wage Compliance Code (Voluntary Code) will be established.

Compliance with the Voluntary Code means a small business won’t be criminally prosecuted if they underpay their employees.

The Voluntary Code is in the process of being developed. We’ll provide more information about the Voluntary Code and how it operates when it’s available. Please keep checking back here for updates.

Civil penalties for wage underpayments

Calendar iconThese changes start no earlier than 1 January 2025.

The new laws increase the maximum penalty for a contravention related to an underpayment for a non-small business employer.

The new laws will mean that this maximum penalty can (in certain circumstances) be the greater of:

  • 3 times the value of the underpayment
  • the relevant penalty unit amount for the contravention.

Civil penalties and serious contraventions

Calendar iconThese changes started on 27 February 2024.

The new laws:

  • increase maximum penalties that courts may impose for certain contraventions
  • introduce new threshold for ‘serious contraventions’ of the Fair Work Act.

These changes include:

  • doubling the maximum penalty for a non-compliance with a compliance notice
  • increasing the maximum penalty by 5 times for ‘selected civil remedy contraventions’ by a business with 15 or more employees.

The ‘selected civil remedy contraventions’ include breaches of:

Before the changes, a serious contravention was when a court found that the:

  • person or business knew they were contravening an obligation under workplace laws
  • contravention was part of a systematic pattern of conduct affecting one or more people.

The new laws have changed the threshold for a serious contravention. Now, a serious contravention can happen where there has been a ‘knowing or reckless’ contravention. This is instead of the previous threshold of ‘knowing and systematic’.

We’ve now updated our compliance and enforcement information to reflect the changes:

Compliance notices

Calendar iconThese changes started on 27 February 2024.

The new laws clarify how compliance notices can work in 2 ways.

The new laws now say that compliance notices we issue to employers can require the employer to:

  • calculate the underpayment amount owed to an employee
  • pay the amount owed to the employee.

The new laws also say that courts can order employers (who have been issued with a compliance notice) to comply, either wholly or partly, with its terms.

Example: Compliance notice

Aleksander runs multiple cafes. Some of Aleksander’s employees have raised concerns with us that they think they have been underpaid.

A Fair Work Inspector reviews the employees’ concerns. The Inspector believes underpayments have occurred and issues a compliance notice to Aleksander.

The compliance notice requires Aleksander to:

  • calculate the suspected underpayment amounts
  • pay those amounts to the affected employees.

Aleksander calculates the underpayments and pays the amounts owed to the employees.

We've updated our Compliance notices page to reflect the changes. 

New discrimination protections

Calendar iconThis change started on 15 December 2023.

There are stronger protections against discrimination for employees experiencing family and domestic violence.

This means that it’s unlawful for an employer to take adverse action (including dismissal) against an employee because the employee is (or has been) experiencing family and domestic violence.

We’ve updated our Protection from discrimination at work page to reflect the changes.

Small business redundancy exemptions

Calendar iconThis change started on 15 December 2023.

Small business employers aren’t usually required to pay redundancy pay to employees who are made redundant.

However, a non-small business can become a small business as part of the process of downsizing its workforce. This can be due to insolvency in the period leading up to (or after) becoming:

  • bankrupt, or
  • going into liquidation.

In the past, this has meant that these employers no longer need to pay redundancy pay to employees made redundant after the business has fewer than 15 employees left.

Under the new laws, non-small business employers that become a small business employer in these circumstances may still be required to pay their employees redundancy pay.

Access our updated information:

Changes to workplace health and safety and workers compensation

There are other workplace changes as part of the Closing Loopholes laws. These include changes to workers compensation and workplace health and safety.

The changes include from:

  • 5 December 2023: expanding the functions of the Asbestos Safety and Eradication Agency to include silica
  • 15 December 2023: streamlining the Comcare workers compensation claims process for certain first responders who sustain post-traumatic stress disorder (PTSD)
  • 14 June 2024: introducing a new guide for arranging rehabilitation assessments and requiring examinations to be prepared by Comcare
  • 1 July 2024: amending the Commonwealth Work Health and Safety Act to introduce a new criminal offence for industrial manslaughter and significantly increasing penalties for other offences.

Other government bodies will be responsible for communicating about these changes, including Comcare and Safe Work Australia.

Tools and resources

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