Criminalisation of Intentional Wage Theft
7 mins read
Published Jan 1, 2025
Part of the "Closing Loopholes" reforms, this law introduces federal criminal penalties for employers who intentionally engage in underpayment conduct. For companies, fines can reach up to $7.8 million (or three times the underpayment amount), and individuals can face up to 10 years in prison. For an auditing app, this elevates "accidental" misconfigurations from a civil risk to a potential criminal liability for the client.
The Change
As of 1 January 2025, the federal government has officially criminalised intentional wage theft under the "Closing Loopholes" reforms. This marks a radical shift in Australian workplace law. While honest mistakes remain civil matters, "intentional" conduct—such as deliberately underpaying award rates or failing to pay superannuation—can now lead to jail time of up to 10 years for business owners and fines exceeding $7.8 million for companies.
Implications for SMB Owners
The "intentional" threshold is the key battleground for SMBs. While the FWO has introduced a Voluntary Small Business Wage Compliance Code, the best defense is proof of a proactive compliance system. SMB owners can no longer plead ignorance or blame manual errors.
If a business owner is aware that an employee is working "off the clock" or is being paid a flat rate that doesn't cover award-mandated penalties, they are now operating in the shadow of criminal prosecution. This change makes it essential for owners to have auditable, real-time data that sits between their rostering and payroll systems to provide a "paper trail" of compliance.
