New Criminal Underpayment Laws: What You Need to Know

Hello Chasers,

If you thought that you could not pay your Team’s entitlements correctly or even just not pay them at all, then think again!

The Fair Work Ombudsman (FWO) has introduced new criminal underpayment laws that came into effect on January 1, 2025. These laws are designed to crack down on serious wage theft and protect employees from being exploited.

What has changed?

Under the new laws, it is now a crime for a business to intentionally underpay an employee. This means that company directors and other individuals who are involved in the underpayment can be personally liable for prosecution.

What are the protections for businesses?

There are a number of protections in place to help businesses avoid criminal prosecution.

These include:

  • The Voluntary Small Business Wage Compliance Code: This is a set of guidelines that businesses can follow to ensure they are paying their employees correctly.
  • Cooperation agreements: These are written agreements between the FWO and an employer who has admitted to underpaying their employees. The agreement allows the employer to avoid criminal prosecution if they comply with the terms of the agreement, such as repaying the underpaid wages to their employees.

What should you do?

If you are unsure about your workplace compliance obligations, you can contact the Fair Work Ombudsman for free advice and assistance. You can also get help from a registered tax or BAS agent.

By following these tips, you can help to ensure that your business is compliant with the new criminal underpayment laws.

In addition to the above, here are some additional tips for business owners:

  • Conduct regular audits of your payroll system to ensure that employees are being paid correctly.
  • Stay up-to-date with the latest changes to workplace laws.
  • Seek professional advice if you are unsure about your obligations.

By taking these steps, you can help to protect your business from the risk of criminal prosecution.

If you have concerns about managing your payroll system, please contact our experienced team on 03-55612643 as soon as possible.

Have a great day!

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