The underpayment of wages can now be a criminal offence in Australia. From 1 January 2025, intentionally underpaying an employee’s wages or entitlements can be investigated by Fair Work Ombudsman. If an employer is suspected of criminal underpayment offenses, they can be prosecuted by the Commonwealth Director of Public Prosecutions (CDPP). If they are convicted of a criminal offense, the penalties for underpaying employees imposed by a court can be fines, prison time, or both.
However, there are exceptions and protections in place for businesses, especially small businesses. If the underpayment was an honest mistake, it would not be counted as a criminal offense. Additionally, there is the Voluntary Small Business Wage Compliance Code, and cooperation agreements.
If you need help maintaining your payroll services Brisbane wide, work with Go Figured Bookkeeping. For more information on our services, call the team on 07 3608 4206 or reach out online.
Following the Voluntary Compliance Code
Running a small business has its own unique set of challenges that can lead to mistakes, like the underpayment of wages, being made unintentionally. The Voluntary Small Business Wage Compliance Code provides a clear framework for small businesses to avoid the risk of criminal prosecution due to the underpayment of wages.
This code is a guide for businesses with less than 15 employees. It does not apply to businesses with over 15 employees, independent contractors, or hirers of regulated workers. Compliance with the code demonstrates a business is taking the necessary steps to ensure they pay employees correctly. The code outlines key actions a business can take, these include:
- Checking the correct pay rates and entitlements regularly
- Following any pay slip and record-keeping obligations
- Staying up to date with workplace laws
- Seeking help if needed
- Fixing any issues quickly when they occur
What To Do If Your Business Has Underpaid Staff
Cooperation agreements can provide protection from potential criminal penalties for underpaying employees when the conduct amounts to a potential offence. Cooperation agreements are important as they promote positive engagement and cooperation with Fair Work and allow the opportunity to address intentional underpayment of wages without the need for criminal prosecution.
Cooperation agreements cannot be used for the underpayment of independent contractors or regulated workers. Ultimately, it will be up to Fair Work whether or not they enter into a cooperation agreement, and they will consider the following:
- Whether there has been voluntary, frank, and complete disclosure of the conduct
- The nature and level of detail in the disclosure in relation to conduct
- Whether there is cooperation with them in relation to the conduct
- Their assessment of the employer’s commitment to continued cooperation in relation to the conduct
- The nature and gravity of the conduct
- The circumstances in which the conduct occurred
- The employers history of compliance with the Fair Work Act
Learn The Laws
The best way to protect your business from facing the penalties for underpaying employees
is to make sure you are up to date on the laws. Resources regarding the January 2025 changes can be found here. The other way to ensure compliance when it comes to paying employees is to outsource your payroll responsibilities with the help of a professional bookkeeper.
Don’t Risk It – Work with Go Figured Bookkeeping
With the incorrect management of payroll carrying hefty penalties, it isn’t worth the risk. By working with some of the best Brisbane bookkeepers, you can ensure total compliance with the 2025 changes.
With over 24 years of experience, Go Figured Bookkeeping is here to help with your payroll, business activity statements, and end of financial year planning. For more information on our services, call the team on 07 3608 4206 or reach out online.