Wage Theft Fair Work – New Laws Could See Hefty Fines or Even Jail for Employers
As a professional payroll service provider I get so angry when I see businesses underpaying their staff so you could imagine how thrilled I was when I saw the new wage theft laws that came into effect at the beginning of 2025! What a fantastic way to start the new year for many underpaid employees. The message is very simple – if you can’t pay your staff the correct wages, either don’t employ them or don’t go into business where you rely on staff.
Wage Theft in Australia: How Easy It Is to Commit Without Realising?
Wage theft has become a hot topic in Australia, drawing significant attention from the media, regulators, and the public. While deliberate underpayment of employees is undeniably a serious offense, many businesses may unknowingly commit wage theft through unintentional errors in payroll, a misunderstanding of awards, or outdated systems. Regardless of intent, the consequences for businesses are severe, both legally and reputationally.
This blog explores how wage theft can occur, why it’s surprisingly easy to fall into, and what steps businesses can take to avoid it
What is Wage Theft?
Wage theft occurs when employers fail to pay their employees the correct wages or entitlements. This can include:
- Paying below the minimum wage
- Failing to pay overtime, penalty rates or allowances
- Not providing mandatory superannuation contributions
- Misclassifying employees as independent contractors
- Withholding entitlements such as annual leave or sick leave
- Nor paying employees correctly for public holidays.
How Does Wage Theft Happen Without Realising?
1. Complexity of Awards
Australia’s industrial relations system includes over 100 Modern Awards, each with unique provisions. Employers may misinterpret these awards, leading to underpayments. For instance, an employee might be classified under the wrong award, or employers might overlook penalty rates for weekend or evening shifts.
2. Outdated Payroll Systems
Manual payroll processing or outdated systems can result in errors, especially when dealing with varying pay rates, allowances, or roster changes. Relying on spreadsheets or legacy software increases the likelihood of miscalculations.
3. Changes to Legislation
Employment laws and award conditions are regularly updated. Businesses that fail to stay informed about these changes risk unknowingly breaching compliance. For example, casual employment reforms or increases to the national minimum wage can catch unprepared employers off guard.
4. Misunderstanding Employee Status
Misclassifying employees as contractors or casual workers, when they should be permanent, can lead to unpaid entitlements such as annual leave, redundancy pay, or superannuation. This is a common issue in industries with flexible work arrangements
5. Untracked Work Hours
Failing to track or account for employees’ actual work hours, especially for part-time or casual workers, can result in unpaid overtime or underpaid wages.
6. Not Paying Public Holiday Entitlements
Permanent employees are entitled to be paid for public holidays if they would normally work on those days, even if they don’t perform any work. Employers may unintentionally overlook this, particularly in industries with varying rosters.
7. Failing to Provide Payslips
Employers might not realise that not providing payslips is a breach of workplace laws. Without payslips, employees may not identify errors in their payments, leaving employers unaware of discrepancies.
Consequences Of Not Following the National Employment Standards (NES)
The National Employment Standards (NES) are a set of 11 minimum entitlements that apply to most employees in Australia. Failure to comply with the NES can lead to:
1. Legal Penalties
Breaching the NES can result in significant fines. For example, failing to pay employees their public holiday entitlements or other NES rights can attract penalties of up to $82,500 for companies and $16,500 for individuals per breach.
2. Back Payments with Interest
Employers found in breach of the NES are required to repay all unpaid wages and entitlements, often with interest. This can create substantial financial strain, especially for small businesses.
3. Damaged Employee Relationships
Not adhering to the NES, such as failing to pay for public holidays, can lead to dissatisfaction, low morale, and a lack of trust among employees. This can impact productivity and increase staff turnover.
4. Reputational Damage
Cases of non-compliance, even unintentional ones, can tarnish your business’s reputation. This can discourage potential employees and damage customer confidence in your brand.
5. Increased Regulatory Scrutiny
Failing to comply with the NES could trigger investigations by the Fair Work Ombudsman, leading to broader audits and potential uncovering of additional compliance issues.
How Outsourcing Payroll Can Protect Your Business
Managing payroll in-house can be overwhelming, especially for small businesses. This is where outsourcing payroll to a professional firm like BAS and Balances can make a significant difference.
1. Ensure Accurate Payments
At BAS and Balances, we specialise in staying up-to-date with Australia’s complex industrial laws and awards. Our team ensures that employees are paid correctly every time, eliminating the risk of unintentional wage theft.
2. Compliance with the NES
By outsourcing your payroll, you can rest assured that your business meets all NES obligations, including correct public holiday entitlements, leave accruals, and superannuation contributions.
3. Save Time and Reduce Stress
Let us handle the complexities of payroll so you can focus on growing your business. Our expertise minimises errors and streamlines processes, giving you peace of mind.
4. Avoid Penalties
Professional payroll management reduces the risk of underpayment issues that could lead to legal penalties, back payments, or reputational damage.
5. Customised Solutions
We tailor our services to your specific business needs, ensuring compliance without unnecessary costs or complications.
Take Action Today
Don’t let payroll errors put your business at risk. Contact BAS and Balances to outsource your payroll and ensure compliance with Australia’s workplace laws. Let us help you build a fair, compliant, and efficient workplace.
Reach out to us today and take the first step toward protecting your business and your employees!
