Wage Theft Is Now a Crime: How Prepared Is Your Payroll?
From 1 January 2025, intentional wage underpayment is a federal criminal offence. This is not a “watch and wait” reform. It’s here, it bites, and it targets behaviour that falls well short of best practice. Fair Work Ombudsman+2dewr.gov.au+2
The line between mistake and misconduct
Criminal: intentional underpayment (for example, knowingly applying the wrong rate or ignoring overtime provisions).
Civil: errors or negligence—still expensive, still reputationally damaging, but different consequences. The new regime also lifts some civil penalties and sharpens enforcement tools.
Small businesses that engage with the voluntary compliance code may access protections when errors occur and are corrected promptly—worth serious consideration if you’re lean on payroll resources.
The practical hotspots I keep finding
Incorrect classification under modern awards.
Missed overtime/penalty triggers with flexible rosters.
Annualised salary set-and-forget (no reconciliations).
Under-recorded work time (travel, set-up, handover).
Misapplied allowances and loadings.
Your 60-day risk crush plan
Award mapping: Confirm the right award(s), streams, levels—per role.
Rate engine check: Test every pay code end-to-end (ordinary, OT, penalties, allowances, leave).
Rostering to reality: Align rosters, recorded hours, and payslips. Where reality diverges, fix the workflow—not the payslip.
Annualised salary audits: Reconcile each quarter; adjust if shortfalls appear.
Governance upgrade:
Standard operating procedure for payroll changes.
Escalation path for ambiguities (HR → payroll → external advice).
Board-level metric: “payroll accuracy %” reported quarterly.
What the regulators care about
The Fair Work Ombudsman has recovered $1.5bn+ in underpayments in recent years. Expect continued scrutiny and less patience for “we didn’t know.”
Our HR Audit packages (≤25 or 26–60 staff) include a targeted compliance review. We identify risk, calculate exposure, and implement corrections—before a regulator (or a class action) does it for you.
