New criminal underpayment laws started on 1 January 2025, bringing new risks for agribusinesses.
Here’s a reminder about what’s changed.
The Changes
From 1 January 2025, intentional underpayment of wages or entitlements can be a criminal offence.
Fair Work Australia can now investigate suspected criminal underpayment offences and refer suitable matters for criminal prosecution. If a person is convicted of a criminal offence, a court can impose fines, prison time, or both.
Underpayment may include:
- not paying sufficient wages, including penalty rates, overtime rates and allowances (or not paying them at all)
- not paying amounts required by the applicable award or enterprise agreement
- not paying other entitlements, for example, superannuation for some employees.
Small businesses will commit the criminal offence for intentionally underpaying an employee if:
- they’re required to pay an amount to an employee, such as wages or super
- they fail to pay the amount in full on or before the day they’re due to be paid
- they intentionally engage in conduct with the intent that it results in those amounts not being paid.
Intentional conduct includes:
- taking an action, such as purposefully paying less than an employee’s minimum entitlements
- failing to take an action, like purposefully not paying an employee at all.
What is ‘The Code’ for Small Businesses?
The Voluntary Small Business Wage Compliance Code is a legislative instrument created under the Fair Work Act. Its purpose is to help small business employers avoid criminal prosecution if they didn’t intentionally underpay their workers. The FWO can’t refer a small business for criminal prosecution under the criminal offence if they can demonstrate that they have complied with the Code.
A small business employer will have complied with the Code if they did not intend to underpay their employee. The Code contains several factors that may be relevant when the FWO considers whether a small business employer intentionally underpaid their employee. This includes:
- any steps the business took to check they’re paying their employees correctly and staying up to date with changes. This includes any minimum pay increases or legislative updates
- any steps the business took after finding out about the underpayment, including:
- correcting mistakes
- promptly back paying workers
- taking steps to ensure the underpayment doesn’t happen again.
Businesses of all sizes can use the Code and supporting guide to ensure they are paying their employees correctly and quickly address any issues as they arise.
What You Can Do Now
The Lucas Group has prepared a guide on how to navigate these changes and how to make sure you’re complying with all recent changes to awards and the Fair Work Information Statement. Follow our action steps to compliance here.
You can also access tools and guides through Fair Work including:
- Fair Work’s Guide to paying employees correctly and the Code to check employees are being paid correctly.
- Fair Work’s free tools and resources, including calculators to check pay rates.
Proactive preparation is key to avoiding costly mistakes and protecting your business’s reputation. Understanding changes, auditing practices, and implementing strong compliance systems help agribusiness employers safeguard themselves and their employees under the new legislation.
More information on Closing Loopholes changes from The Lucas Group can be found here.
Visit the Fair Work Ombudsman’s website here for further clarification on wage theft criminalisation.