New Criminal Underpayment Laws Have Commenced

A Caday Workplace Relations Guide

⚖️ What Employers Need to Know from 1 January 2025

Australia’s workplace relations landscape continues to shift, and one of the most significant changes for employers took effect on 1 January 2025: the introduction of criminal penalties for intentional wage underpayment.

These reforms signal a stronger national stance on wage compliance and place new responsibilities on employers to ensure their payroll and entitlement practices are accurate, transparent, and well‑governed.

Below is a clear summary of what has changed — and how small businesses can protect themselves.

🔍 What Has Changed?

From 1 January 2025, the intentional underpayment of wages or entitlements can constitute a criminal offence.

If a person is convicted, the court may impose:

• Significant fines

• Imprisonment

• Or both

This applies to deliberate conduct — not honest mistakes — but the threshold for “intentional” behaviour will be closely examined in investigations.

🏢 What This Means for Employers

The introduction of criminal penalties elevates wage compliance from a financial risk to a legal and reputational risk. Employers must ensure:

• Payroll systems are accurate

• Awards and classifications are correctly applied

• Rosters and hours worked match what is paid

• Entitlements are tracked and paid correctly

• Underpayments are identified and rectified promptly

Even unintentional errors can escalate if not addressed quickly and transparently.

🛡️ Protection for Small Business: The Voluntary Small Business Wage Compliance Code

There is an important safeguard for small business employers.

If a small business is found to have underpaid an employee but has complied with the Voluntary Small Business Wage Compliance Code, the conduct cannot be referred for possible criminal prosecution.

This means the Code acts as a protective framework — provided the business:

• Follows the Code’s processes

• Takes reasonable steps to ensure compliance

• Rectifies underpayments in line with the Code’s requirements

For small businesses, adopting the Code is a practical way to reduce risk and demonstrate a genuine commitment to doing the right thing.

✔️ How to Protect Your Business

To stay compliant and minimise exposure, contact Caday Workplace Relations who can:

• Conduct regular payroll and award audits

• Review employee classifications and hours

• Ensure managers understand award obligations

• Document processes for identifying and correcting errors