Several Australian states have taken the bold step forward in protecting its workforce with the introduction of the new wage theft law in 2025. This blog post will discuss the wage theft laws in Victoria and Queensland, where intentionally underpaying an employee’s wages or entitlements is now a criminal offence. The wage theft law came into effect on 1 January 2025, and intentionally underpaying an employee’s wages or entitlements is now a criminal offence. This landmark legislation aims to hold employers accountable and provide justice for workers. Here’s everything you need to know about the new law and its far-reaching implications.
Disclaimer: The information provided in this blog post is for informational purposes only and does not constitute legal advice. Please consult with a qualified legal professional for advice on your specific circumstances.
What is Wage Theft?
Wage theft occurs when an employer deliberately underpays or denies an employee their rightful wages, benefits, or entitlements. This includes actions like failing to pay for overtime, paying below the minimum wage, or withholding leave entitlements. Wage theft is a serious issue affecting many workers, and now, the law is stepping in to protect them.
Key Details of the 2025 Wage Theft Law
From 1 January 2025, intentionally underpaying employees is a criminal offence. However, it’s important to note that honest mistakes or inadvertent errors are not covered under this law. The legislation was introduced as a result of the Voluntary Small Business Wage Compliance Code Declaration 2024, which is administered by the Department of Employment and Workplace Relations. This code offers small business employers a clear pathway to avoid criminal prosecution, as long as they follow the code’s guidelines and ensure compliance with wage laws.
Here are the key points of the law:
- Criminal Penalties for Employers: Employers who intentionally underpay their employees could face significant penalties, including heavy fines and potential imprisonment. Corporate executives involved in these offences could face up to 10 years in prison. If the Fair Work Ombudsman is satisfied a small-business employer (<15 employees) has complied with the Code when rectifying unintended under-payments, the matter cannot be referred for criminal prosecution.
- Stronger Employee Protections: The law provides workers with stronger protections. If an employee finds themselves underpaid, they can now claim their rightful earnings without the fear of retaliation from their employer.
- Expanded Definition of Underpayment: The new law broadens the definition of wage theft, now covering more forms of exploitation. These include underreporting hours worked, misclassifying workers, and manipulating records to avoid paying fair wages.
Why This Law Matters
The new wage theft law is a crucial development for both workers and employers. Let’s break down why it matters:
- Fairer Treatment of Workers: This law directly addresses the ongoing issue of underpayment, particularly in industries with casual or migrant workers. It aims to put an end to the exploitation of vulnerable employees.
- Holding Employers Accountable: The legislation places a greater responsibility on employers to ensure compliance with wage laws. By criminalising wage theft, the law creates a deterrent against unethical business practices, helping to level the playing field for all businesses.
- Restoring Trust in the Workplace: With fair pay at the forefront, the law helps restore trust between employers and employees. It fosters a more positive work environment where workers feel valued and fairly compensated.
Implications for Employers
Employers must now take action to ensure compliance with the new wage theft law. This includes reviewing payroll processes, updating employee contracts, and auditing business practices. Small business owners can also choose to adopt the Voluntary Small Business Wage Compliance Code to avoid criminal prosecution. This code offers a practical framework for ensuring compliance with wage laws while avoiding legal trouble.
Failure to comply could result in severe consequences, including costly legal battles, fines, and reputational damage. Employers should take proactive steps to safeguard against wage theft and ensure fair compensation for all employees.
Final Thoughts
The introduction of the wage theft law marks a significant change for the Australian workforce. With stronger protections for employees and stricter penalties for employers, the law aims to create a more fair and transparent work environment. As this law comes into effect in 2025, both employees and employers must familiarise themselves with their rights and responsibilities. This is a major win for fairness, transparency, and the protection of workers in Australia.
How can 360 Business Law Assist
As Australia’s new wage theft law takes effect, businesses need to stay informed about these changes and their potential implications. At 360 Business Law, we are committed to providing expert guidance on legal compliance and employee rights. By ensuring adherence to new regulations, businesses can foster a fair and transparent work environment, reducing the risk of legal challenges. Stay proactive in understanding your responsibilities under this new law to safeguard your company and employees, ensuring fair treatment and compliance with evolving legal standards.