Wage Theft Is Now a Criminal Offence in Australia: Penalties Up to 10 Years in Prison

From 1 January 2025, intentional underpayment of employees became a criminal offence under the Fair Work Act. The new provisions (Part 3-5A) make it a crime for an employer to intentionally engage in conduct that results in underpaying wages, superannuation, or other entitlements. This applies to national system employers and covers underpayment of minimum wages, penalty rates, overtime, allowances, leave entitlements, redundancy pay, and superannuation contributions.

The criminal provisions sit alongside existing civil penalty provisions — the difference is intent. An accidental underpayment due to a payroll error remains a civil matter, while deliberately paying less than required is now criminal.

Don't gloss over this. This law was introduced by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024.

For individuals (including directors, managers, and HR officers who are involved in the offence): up to 10 years imprisonment and/or fines of up to $1,565,000 (5,000 penalty units). For body corporates: fines of up to $7,825,000 (25,000 penalty units) or three times the underpayment amount, whichever is greater. These are among the toughest wage theft penalties in the world.

The criminal standard of proof applies — the prosecution must prove beyond reasonable doubt that the underpayment was intentional. Investigations will be led by the Fair Work Ombudsman in consultation with the Commonwealth Director of Public Prosecutions.

Companies can avoid criminal prosecution by cooperating with the FWO through a new Voluntary Small Business Wage Compliance Code.

About the law targets deliberate, knowing underpayment. Examples include: an employer who knows the award rate is $24.95/hr but deliberately sets pay at $22/hr, an employer who records fewer hours than an employee actually worked, an employer who intentionally classifies employees as contractors to avoid paying entitlements, and an employer who knowingly fails to pay superannuation while telling employees they're paying it. It does NOT cover genuine mistakes, system errors, or misinterpretation of complex award provisions.

The prosecution must prove the employer knew what the correct entitlement was and chose not to pay it. This intent requirement means most small businesses making honest errors won't face criminal charges, but serial or deliberate underpayers now face serious consequences.

If you believe you are being intentionally underpaid, start by gathering evidence: keep your own records of hours worked, check your payslips against your award rates (use our Pay Calculator), and save any communications about your pay. You can report to the Fair Work Ombudsman online at fairwork.gov.au or call 13 13 94. Reports can be made anonymously.

The FWO will assess whether the matter warrants civil or criminal investigation. You are protected from retaliation — it's illegal for your employer to take adverse action against you for making a complaint.

You can also contact your union, who can assist with complaints and representation. If you've already been underpaid, you may be entitled to back pay plus interest and penalties. Use our tools to calculate what you should have been paid.