Australian employers who deliberately underpaid workers could be fined $7.8 million, or face up to 10 years jail, under new federal wage theft laws.
Under the legislation, there will be a maximum possible penalty of 10 years imprisonment and maximum fines of up to $7.8 million – or three times the amount that was underpaid if that amount exceeds the maximum fine.
This is the first time the level of penalty can be proportionate to the extent of the underpayment.
Industrial Relations Minister Tony Burke said criminal penalties won’t apply to employers who make honest mistakes.
Under the legislation, the Fair Work Ombudsman will also be responsible for investigating new offences and would also have the discretion not to pursue criminal proceedings if the business enters into a co-operation agreement.
“Enforceable Undertakings for civil breaches will continue to be available where appropriate,” said Burke.
It follows the release of a recent report by the Mckell Institute that estimated Australian workers were being underpaid nearly $850 million per year, costing the economy more than $330 million.
The increases to civil penalties and changes to the “serious contraventions” provisions will commence 1 January 2024.
The new wage theft offence will commence by proclamation or no later than 1 January 2025.
The Albanese government introduced its Closing Loopholes Industrial Relations Bill this week following months of consultations, including with employer groups and unions.
The four major elements of the bill are criminalising wage theft, closing the forced permanent casual worker loophole, introducing minimum standards for workers in the gig economy, and closing the labour hire loophole.
Small Business rejects “complex” IR changes
The Council of Small Business Organisations Australia (COSBOA) has voiced it concerns about the IR changes.
“COSBOA is concerned with the confusion and complexity, combined with an increased requirement of every business, small or large, to dedicate resources, time, and money towards trying to understand and implement these onerous new obligations,” the organisation said.
“The small business community rejects the intrusion of so much more complex regulation into the ability to be productive and flexible, let alone just getting on with being in business and employing more people.”
COSBOA said wage underpayments and overpayments are a consequence of a complex award and employee classification system.
“Wage theft: where it is intentional, deliberate, and repeated should not be tolerated. An appropriate regime should be implemented to provide the FWO with the necessary tools to detect and prosecute such actions,” COSBOA stated.
“When government departments and regulators can get it wrong, despite their teams of payroll and IR specialists, why should business be prosecuted for unintended mistakes.
“Small business fear that these changes won’t close loopholes. No longer will an entrepreneur be encouraged to start and grow a business.”
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