Not so Happy New Year - new wage theft laws bring the threat of imprisonment
Posted on December 09, 2024
New “wage theft” laws commence on 1 January 2025.
From January 2025 “wage theft” will occur when an employer intentionally engages in conduct which results in a failure to pay an employee an amount due to them. Inadvertent or unintentional underpayments are not captured by these new laws. Laws and penalties already exist for unintentional underpayments.
A breach of the wage theft laws will attract heavy penalties:
- for body corporates, $7.825 million or 3 x the underpayment amount; and
- for individuals, 10 years in prison, $1.56 million or 3 x the underpayment amount.
Note also that prosecution for wage theft does not preclude civil action by the Fair Work Ombudsman or an individual themselves.
Determining what is intentional conduct will involve a detailed assessment of all the relevant facts including the employer’s culture and attitude toward wage compliance.
In the criminal context, if the employer is a body corporate, intention is established where a body corporate expressly, tacitly or impliedly authorises or permits the commission of the offence[1].
This can be established where:
- the Board of Directors or a High Managerial Agent intentionally, knowingly or recklessly is engaged in the conduct; or
- expressly, tacitly or impliedly authorises or permits the commission of the offence;
- a “corporate culture” existed, directed, encouraged, tolerated or led to non-compliance; or
- the body corporate failed to create and maintain a corporate culture that required compliance.
A “High Managerial Agent” is an employee, agent or officer of a body corporate “with duties of such responsibility that his or her conduct may be fairly assumed to represent the body corporate’s policy[2]. This will involve an analysis of an individual’s duties and responsibilities.
“Corporate Culture” means an attitude, policy, rule, course of conduct or practice existing within the body corporate generally or in the part of the body corporate in which the relevant activities take place.
Key Takeaways
There are some practical steps that boards and senior management can take to mitigate the risks of a finding of wage theft which include:
- ensure that there are policies and procedures in place to demonstrate a commitment to wage compliance and specifically that these measures are implemented and followed in practice;
- create and maintain a corporate culture that requires compliance and responds to wage discrepancies and enquiries as and when they occur;
- train boards and senior management about the importance of compliance with wage laws; and
- If necessary, undertake an audit of payroll systems.
Remember, not only is your business and some people within it at risk of significant penalties; a finding of wage theft can also be extremely damaging to an employer’s brand and reputation.
Please contact our Workplace Relations team if you require any assistance with wage theft queries or any other workplace issues.
[1] Criminal Code Act 1995 (Cth), s12.3, [2] Criminal Code Act 1995 (Cth) s12.3
