Wage theft and underpaying employee entitlements is in news headlines again after the Commonwealth Bank was recently found underpaying 529 current and former employees.
It may come as a surprise to know that some breaches of the Fair Work Act 2009 (Cth) are criminal offences. These offences can result in significant penalties as well as criminal convictions recorded.
New “closing the loophole” laws have been passed which increase the maximum penalties that may be imposed for both civil breaches of the Act and criminal offences as well as adding new criminal offences to the Act.
At Mal Ryan & Glen we can help you to comply with your employment obligations.
You can also contact the Fair Work Ombudsman for free advice about whether you are receiving your correct entitlements or to ensure you are compliant with employment laws.
Contact the Fair Work Ombudsman via:
phone 13 13 94,
Recent criminal prosecutions for underpayments of long service leave
In the case involving the Commonwealth Bank, the criminal offence was that of failing to pay the full amount of long service leave entitlement to 17 former employees. No criminal conviction was recorded due to early guilty plea and no prior convictions.
The remaining 512 employees must also be repaid, although those underpayments were not classified as criminal offences.
The case follows a string of similar litigation against some big companies including:
in June of this year, Optus pleaded guilty to underpaying 5 former employees more than $6,000.00,
in May of this year, Spotless pleaded guilty to underpaying 3 casual employees $2,276 in outstanding long service leave entitlements,
in April of this year, Woolworths pleaded guilty of underpaying 1,191 former employees more than $960,000.
Penalties in cases like this can be significant. For example, Woolworths was fined $1,227,000.00 on top of being required to rectify the underpayments. Business owners should also be aware that underpaid employees will be entitled to interest on their underpayments.
New laws targeting underpayments
Compliance and enforcement must be taken seriously by everyone particularly as new “closing the loophole” laws are coming into effect. Some of these laws have already commenced including:
new maximum penalties for civil remedy contraventions which are now a maximum of $469,500 per contravention for a company,
for serious contraventions, maximum penalties are now $4,695,000 for a company.
In July 2025, new laws will commence which will include:
making it a criminal offence to intentionally underpay an employee,
for criminal offenses, a potential prison term being ordered or millions of dollars in penalties imposed,
for civil contraventions relating to wages underpayments where serious contraventions are found, potential financial penalties being imposed in the order of 3 times the value of the underpayment.
Many of these penalties are different for individuals and small businesses. Generally, maximum penalties for these employers are $18,780 per contravention for an individual and $93,900 for a company.
The takeaway
While there is no doubt that our employment laws are complex, the courts do not consider this to be an adequate reason for underpaying employees.
Companies must comply with a range of complex legislation as par for the course of doing business. Laws such as employment laws, tax laws, insurance laws, licensing and permit laws must all be complied with. Business owners must factor these into business planning.
This article is general in nature. It does not constitute legal advice and should not be taken as such.
Comments