Wage Theft in Australia — Now a Criminal Offence (2025)

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) Act 2023. 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 aren't criminalised. The new offence targets employers who deliberately underpay workers knowing they're doing so.

The short answer? This reform followed years of large underpayment cases across restaurants, universities and retail, and a view that civil penalties alone were not deterring deliberate underpayment.

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 $1.82 million from 1 July 2026). For body corporates, the maximum fine is the greater of three times the underpayment amount or 25,000 penalty units (approximately $9.1 million from 1 July 2026).

The criminal offence sits alongside the existing civil penalty regime. 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 $109,200 per contravention for body corporates (small business employer; $546,000 for a body corporate with 15 or more employees) and $21,840 for individuals. Serious contraventions (knowing or reckless breaches) attract penalties ten times higher under the civil regime.

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.

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're 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. It's illegal for your employer to take adverse action against you for making a complaint — this is a protected workplace right (more on this below).

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 doesn't 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.

In the years before criminalisation, a series of large Australian employers self-reported underpayments, many involving salaried staff whose annual salaries did not cover their award entitlements, or casual staff paid the wrong rates. That public attention helped drive the push for reform.

The Fair Work Ombudsman's enforceable undertakings register records many of these matters. For example, the University of Melbourne agreed in December 2024 to provide $72 million in back payments to over 25,000 staff under an enforceable undertaking (FWO media release), and the ABC back-paid more than $11.9 million to over 1,800 current and former casual staff after entering an enforceable undertaking in June 2020 (FWO media release). In hospitality, MADE Establishment entered an enforceable undertaking in July 2019 following self-identified non-compliance resulting in underpayments under the Restaurant Industry Award.

These matters 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.