New Laws on Criminalisation of Wage Theft in Australia: What Small Businesses Need to Know

Effective January 2025, Wage Theft Becomes a Criminal Offence: A Wake-Up Call for Small Businesses

As of January 2025, Wage Theft has become a criminal offence for businesses in Australia. This change has vast implications for employers, including small businesses, who must now ensure they comply with new, stricter laws surrounding employee wages and entitlements, and ensure regular reviews of not only their current rates, but also the conditions workers operate under to make sure they don't fall foul. In short, the introduction of this legislation underscores the importance of maintaining transparency and accountability when it comes to paying employees correctly.

What is Wage Theft?

Wage theft refers to the deliberate (or negligent) underpayment or non-payment of wages and other entitlements, such as overtime, penalty rates, and superannuation. This can include scenarios where an employee is not paid in full for the hours they worked or is misclassified in terms of their employment status, denying them their legal rights to proper compensation.

Previously, wage theft was treated as a civil issue, but the new laws in Australia, introduced in January 2025, have made it a criminal offence. This means business owners found guilty of underpaying employees could face severe legal consequences, including hefty fines and imprisonment.

How Does This Affect Small Businesses:

Small businesses are defined in Australia as those with fewer than 15 employees. These businesses often have tight resources and limited administrative support, which can lead to inadvertent mistakes in wage calculations. However, under the new legislation, ignorance of the law becomes more difficult to use as an excuse, and small business owners must take proactive measures to avoid falling foul of these rules.

Failure to comply with wage laws could result in criminal charges for employers, with penalties of up to 10 years imprisonment in extreme cases. The Australian government has made it clear that all employers, regardless of the size of their business, must meet their legal obligations to workers, which includes ensuring all wages, leave entitlements, and superannuation contributions are correct.

Voluntary Small Business Wage Compliance Code: What Does It Mean:

To help small businesses navigate this complex legal environment, the Government has introduced the Voluntary Small Business Wage Compliance Code. The code provides a framework for small businesses to demonstrate that they are committed to fair and lawful payment practices. While adhering to the code is voluntary, businesses that choose to follow it can receive several benefits, including reduced risk of penalties and an opportunity to show customers and employees that they are committed to ethical practices.

The key areas covered by the compliance code include:

Accurate Record Keeping – Small businesses should maintain clear records of all wages, hours worked, and other entitlements to ensure compliance with the Fair Work Act and other related laws.

Employee Awareness – Ensure employees are fully aware of their pay entitlements and any changes to their wage structures. This can include providing written contracts that outline pay rates and benefits.

Regular Audits – Small businesses should regularly audit their payroll systems and processes to identify and correct any discrepancies before they become significant issues.

Training and Education – Business owners and payroll staff should receive training on the latest wage compliance rules and regulations to minimize the risk of mistakes.

By voluntarily complying with this code, businesses can signal their commitment to fair and ethical practices, which may improve their reputation with both customers and employees. While compliance with the code is not mandatory, it could serve as a safeguard for small business owners, helping them navigate complex wage compliance issues.

How can Simaco help you in complying with the code:

Complying with the Voluntary Small Business Wage Compliance Code is certainly achievable, even for small businesses with limited resources. The key to success lies in staying informed, maintaining meticulous records, and seeking expert guidance when necessary.  If the above option is not available for you, Simaco Partners can also assist, along with our regular compliance reporting, in ensuring your obligations are met.

For small businesses that may be overwhelmed by the new requirements, enlisting the help of professionals like Simaco Partners can be an invaluable step toward ensuring compliance. We can assist in reviewing wage structures, implementing systems for tracking work hours, and ensuring that all employees are paid correctly in line with legal standards.

If you are concerned with whether you comply with these laws, get in contact with Simaco Partners today. We can help businesses navigate the complexities of the new legislation, ensuring full compliance with wage and employment laws. We can assist with setting up and maintaining accurate payroll systems, conducting regular audits to identify potential errors, and provide guidance on how to implement the Voluntary Small Business Wage Compliance Code, depending on your preferred course of action. Additionally, we can assist regarding wages and entitlements. By working closely with Simaco as your expert advisor, we can help mitigate the risk of penalties and gain peace of mind, knowing they are adhering to the latest legal requirements.

Give us a call to discuss your requirements today.

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