Wage Theft Is Now a Crime: What Workers Need to Know

From 1 January 2025, intentional wage theft became a criminal offence under the Fair Work Act 2009, introduced by the Closing Loopholes Act 2024 (Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024). This is a watershed moment for Australian workplace law. For decades, underpaying workers was treated primarily as a civil matter — employers who got caught typically faced fines and back-payment orders, but no criminal consequences.

Now, an employer who intentionally underpays employees can face up to 10 years imprisonment for an individual (such as a business owner, director, or manager), fines of up to $1,565,000 (1,000 penalty units) for an individual, and fines of up to $7,825,000 (5,000 penalty units) for a body corporate. These are among the harshest penalties for wage theft anywhere in the world.

The short answer? The criminal offence is contained in new section 327A of the Fair Work Act. It criminalises intentional conduct — the prosecution must prove beyond reasonable doubt that the employer intentionally engaged in the conduct that resulted in the underpayment.

This is a higher bar than civil penalties, which require only proof on the balance of probabilities.

But the penalties reflect the seriousness: wage theft is now in the same category as fraud and serious financial crime. No exceptions.

About the criminal offence applies to intentional underpayment of amounts owed to employees under the Fair Work Act, modern awards, enterprise agreements, and other fair work instruments. This includes intentionally paying less than the applicable minimum wage or award rate, intentionally failing to pay overtime, penalty rates, or allowances that are owed, intentionally failing to pay leave entitlements (annual leave, personal leave, long service leave) that are owed, intentionally failing to pay notice of termination or redundancy pay, and intentionally failing to make superannuation guarantee contributions (though this may also be prosecuted under tax law). The key word is 'intentionally'.

Real talk: The offence does not cover genuine mistakes, payroll errors, or misunderstanding of complex award provisions. If an employer accidentally calculates an award rate incorrectly because of a genuine misreading of a complex classification structure, that's a civil matter, not a criminal one.

However, 'intentional' does not mean the employer must have specifically intended to break the law — it means they intentionally engaged in the conduct (for example, intentionally paying $25/hour when they knew the award rate was $28.26/hour). Wilful blindness — deliberately choosing not to check what the correct rate is — may also satisfy the intent element. The distinction between a genuine mistake and intentional underpayment will be determined by the evidence: whether the employer had access to the correct rates, whether they had been notified of the correct rates (for example, by the FWO), whether they corrected the underpayment when it was identified, and whether there was a pattern of underpayment.

About the criminal wage theft provisions include an exemption for small business employers — defined as employers with fewer than 15 employees at the time of the contravention. Small business employers are not subject to the criminal offence for underpayments. However, this exemption is narrower than it appears.

Small business employers are still subject to civil penalties for underpayments, which can be up to $93,900 per contravention for a corporation and $18,780 for an individual. The FWO can still investigate, issue compliance notices, and pursue civil litigation against small businesses.

The exemption does not apply to sham contracting offences — small business employers can be criminally prosecuted for sham contracting under the separate provisions in section 357A. The headcount is calculated at the time of the contravention, not at the time of prosecution. If the employer had 14 employees when the underpayment occurred but has since grown to 20 employees, the exemption applies. If they had 16 employees at the time and have since shrunk to 10, the exemption doesn't apply.

Casual employees are counted based on whether they were employed on a regular and systematic basis. Associated entities (related companies) may be counted together under the standard Fair Work Act definition of small business employer in section 23. No exceptions.

The rationale for the exemption is that small businesses often have limited HR and payroll resources and are more likely to make genuine errors — the government's position is that education and civil penalties are more appropriate for small business underpayments.

If you believe you're being underpaid, you've several reporting options. The Fair Work Ombudsman (FWO) is the primary agency for workplace underpayment. Contact them on 13 13 94 or lodge an online enquiry at fairwork.gov.au.

The FWO investigates underpayments, can issue compliance notices requiring the employer to back-pay, and can refer serious cases to the Commonwealth Director of Public Prosecutions (CDPP) for criminal prosecution under the new provisions. When reporting to the FWO, provide as much detail as possible: your payslips, employment contract, the hours you worked (keep your own records — a diary, calendar entries, or timesheets), the rate you were paid versus the rate you believe you should have been paid, and any communications with your employer about pay.

The ATO handles superannuation underpayments specifically. If your employer is not paying your super, report it to the ATO via the unpaid super enquiry form at ato.gov.au. The ATO can audit the employer, issue a Superannuation Guarantee Charge, and in serious cases, refer the matter for criminal prosecution. State and territory police may also become involved in wage theft matters, particularly in Victoria and Queensland where state-level wage theft laws existed before the federal criminal provisions. Keep records.

From 1 January 2025, the federal provisions take precedence, but state agencies may still be involved in joint investigations. You are legally protected from retaliation for reporting underpayment — adverse action against you for making a complaint is a separate contravention of the Fair Work Act under the general protections provisions.

About the vast majority of underpayment matters will continue to be handled through the FWO's civil compliance framework. Criminal prosecution is reserved for the most serious cases of intentional wage theft. The typical enforcement pathway is as follows.

Here's what you need to know: an employee reports an underpayment to the FWO. The FWO assesses the complaint and may contact the employer to seek voluntary compliance.

If the employer cooperates and back-pays the underpayment, the matter may be resolved with a compliance notice or an enforceable undertaking (a legally binding agreement to comply in the future). If the employer doesn't cooperate, or the underpayment is significant, the FWO may commence civil proceedings in the Federal Court or Federal Circuit Court, seeking penalties and back-payment orders. If the evidence suggests the underpayment was intentional, the FWO can refer the matter to the CDPP for consideration of criminal charges. The CDPP independently assesses whether there is sufficient evidence and whether prosecution is in the public interest.

Criminal proceedings are brought in the relevant court with jurisdiction over indictable offences. Civil and criminal proceedings can run in parallel — the employee can recover their underpayment through the civil process while the criminal prosecution proceeds separately. Keep records.

The employee isn't required to participate in the criminal prosecution as a complainant, though they may be called as a witness. The FWO has established a dedicated Serious Contraventions Unit to identify and investigate potential criminal wage theft cases, with additional funding allocated in the 2024-25 federal budget.

If you've been underpaid, you can recover the underpayment through several channels.

Put your claim in writing, specifying the amounts owed, the period of underpayment, and the correct rate under the applicable award or agreement.

If you've been underpaid, you can recover the underpayment through several channels.

• raise it directly with your employer. Many underpayments are resolved informally once the employer is made aware of the error
• lodge a claim through the Fair Work Ombudsman
• engage a lawyer and start proceedings in the Federal Circuit Court (for amounts up to $100,000) or the Federal Court (for larger amounts or more complex matters). You can recover unpaid wages, unpaid leave entitlements, unpaid super contributions, interest on the underpaid amounts, and potentially penalties payable to you as a course of conduct amount

The FWO can investigate and, if underpayment is confirmed, issue a compliance notice requiring the employer to back-pay. This is free. No exceptions.

The time limit for recovering underpayments under the Fair Work Act is 6 years from the date of the underpayment (section 544). This was increased from 6 years in 2023 to align with general contractual limitation periods.

For superannuation, the ATO can pursue unpaid super with no time limit — there's no statute of limitations on super guarantee obligations. If the underpayment is significant, many employment lawyers will act on a 'no win, no fee' basis, particularly for clear-cut award breaches. Community legal centres also provide free legal advice and may assist with smaller claims (more on this below).

Your union, if you are a member, will typically assist with underpayment claims as part of membership. Keep all records: payslips, bank statements, rosters, timesheets, and any correspondence.

These are your evidence.

Prevention is better than recovery. Here are practical steps to protect yourself from wage theft. Know your rate — look up your award at fairwork.gov.au/awards and find the current pay guide for your classification.

The FWO's Pay and Conditions Tool (PACT) at calculate.fairwork.gov.au can calculate your exact entitlements including penalty rates, overtime, and allowances. Keep your own records of hours worked — don't rely solely on your employer's time and attendance system.

The short answer? A simple note in your phone's calendar or a free time-tracking app is sufficient. The Fair Work Act gives your records evidentiary weight — under the reverse burden of proof provisions (section 557C), if an employer fails to keep proper records or provide payslips, and you present a reasonable claim of underpayment, the court can presume the employer's records are incorrect and the employee's records are correct.

Check your payslip every pay period — compare your hourly rate, total hours, penalty rates, and super contribution against what you expected.

It takes 2 minutes and can catch errors early.

Check your super fund balance regularly — log in to your super fund portal or check via myGov to verify that contributions are actually arriving, not just appearing on your payslip. Keep copies of your employment contract, any variation letters, and your enterprise agreement or applicable award.

If something doesn't look right, ask. You have a workplace right to enquire about your pay, and your employer can't take adverse action against you for asking. If the answer doesn't satisfy you, contact the FWO on 13 13 94 — it's free, confidential, and available in over 30 languages through the Translating and Interpreting Service. Keep records.