Wage Theft in Australia — Now a Criminal Offence (2025)
Wage theft is now a criminal offence in Australia with penalties of up to 10 years' imprisonment. Learn what counts as wage theft, how to report it, and your rights.
Wage theft is now a criminal offence
From 1 January 2025, intentional wage theft became a criminal offence under the Fair Work Act 2009, following amendments introduced by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024. Previously, underpayment of wages was treated as a civil matter — employers faced fines and back-payment orders, but no criminal sanctions. Under the new laws, an employer commits an offence if they intentionally engage in conduct that results in a failure to pay an amount owed to an employee under the Fair Work Act, a modern award, or an enterprise agreement. The key word is 'intentionally' — accidental underpayments due to payroll errors or genuine misunderstandings about award coverage are not criminalised. The new offence targets employers who deliberately underpay workers knowing they are doing so. This reform was driven by years of high-profile underpayment scandals involving major Australian companies, including well-known restaurant chains, universities, and retail brands, where systematic underpayment was found to be deliberate company policy rather than honest mistakes.
Penalties for wage theft
The penalties for criminal wage theft are severe and are designed to be a genuine deterrent. For individuals (including company directors and managers who are complicit), the maximum penalty is imprisonment for up to 10 years, or a fine of up to the greater of three times the underpayment amount or 5,000 penalty units (approximately $1.565 million in 2025). For body corporates, the maximum fine is the greater of three times the underpayment amount, 25,000 penalty units (approximately $7.825 million), or 300% of the benefit derived from the offence. These criminal penalties apply in addition to existing civil penalties. The criminal prosecution pathway is handled by the Commonwealth Director of Public Prosecutions (CDPP) following a referral from the Fair Work Ombudsman. The existing civil penalty regime still applies for non-intentional underpayments, with maximum civil penalties of $93,900 per contravention for body corporates and $18,780 for individuals. Serious contraventions (systematic and deliberate patterns) attract penalties five times higher under the civil regime.
What counts as wage theft?
Wage theft encompasses several forms of intentional underpayment. Direct underpayment of wages — paying below the minimum rate specified in the applicable modern award, enterprise agreement, or national minimum wage. This includes base rates, overtime, penalty rates, shift loadings, and allowances. Unpaid superannuation — failing to pay the Superannuation Guarantee (currently 12% of ordinary time earnings) or paying it late. While the ATO administers super compliance, persistent non-payment can now also be prosecuted as wage theft. Withholding entitlements — not paying annual leave, personal leave, long service leave, or public holiday entitlements as required by law. Sham contracting — deliberately disguising an employment relationship as an independent contractor arrangement to avoid paying employee entitlements including minimum wages, leave, and super. This is particularly prevalent in industries like construction, transport, cleaning, and the gig economy. Unlawful deductions — taking deductions from wages that are not authorised by the employee, not permitted by law, or not for the employee's benefit. Cash-back schemes — paying the correct amount on paper but requiring the employee to return a portion in cash.
How to report wage theft
If you believe you are a victim of wage theft, there are several reporting pathways. The primary avenue is the Fair Work Ombudsman (FWO). You can lodge a complaint online at fairwork.gov.au or call the Fair Work Infoline on 13 13 94. The FWO will assess your complaint, investigate if appropriate, and can refer matters to the CDPP for criminal prosecution if intentional wage theft is suspected. For unpaid superannuation, report it to the Australian Taxation Office (ATO) through their online form or by calling 13 10 20. The ATO has dedicated compliance teams for super and can compel employers to pay, plus the Super Guarantee Charge (which includes interest and penalties). If you are a union member, contact your union — they can provide advice, assist with negotiations, and even run test cases. Community legal centres and legal aid organisations provide free employment law advice and can help you assess your situation. You can also contact the FWO anonymously through their anonymous tip-off form. While anonymous reports do not result in individual case resolution, they help the FWO identify patterns and target industries for audits. Importantly, it is illegal for your employer to take adverse action against you for making a complaint — this is a protected workplace right.
Voluntary disclosure scheme
Alongside the criminalisation of wage theft, the government introduced a voluntary disclosure and cooperation scheme. This scheme allows employers who discover they have underpaid employees to self-report to the FWO and enter into a Cooperation Agreement to rectify the underpayment. If an employer enters into and complies with a Cooperation Agreement, the FWO will not refer the matter to the CDPP for criminal prosecution. This is a significant incentive for employers to come forward voluntarily. The scheme recognises that many underpayments, while large, are the result of complex award interpretation errors rather than deliberate theft. To be eligible, the employer must self-report before the FWO commences an investigation, cooperate fully with the FWO, agree to back-pay all affected employees in full (including interest), and implement measures to prevent future underpayments. The scheme does not protect employers from civil penalties — the FWO may still seek civil penalty orders — but it provides protection from criminal prosecution. This two-track approach aims to encourage voluntary compliance while reserving criminal prosecution for the most egregious cases of deliberate wage theft.
Recent high-profile wage theft cases
Australia has seen a series of major wage theft scandals that helped drive the push for criminalisation. Woolworths disclosed in 2019 that it had underpaid salaried store managers by an estimated $400 million over nearly a decade by failing to ensure their total remuneration exceeded what they would have earned under the General Retail Industry Award. Coles, Commonwealth Bank, ABC, Qantas, Michael Hill, Super Retail Group, and numerous other large employers have made similar disclosures. In the hospitality sector, celebrity chef George Calombaris was found to have underpaid staff at his restaurant group by $7.83 million. The University of Melbourne disclosed a $45 million underpayment of casual academic staff. These cases revealed a systemic problem across Australian industries, particularly affecting vulnerable workers including young workers, migrants, international students, and casual employees. The FWO's annual reports consistently show that accommodation and food services, retail trade, and administration and support services are the industries with the highest rates of non-compliance. The criminalisation of wage theft sends a clear message that deliberate underpayment will no longer be treated as merely a cost of doing business.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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