New laws criminalising wage underpayments

Ensuring employees receive their rightful wages is a fundamental aspect of fair employment practices. In line with this commitment, the Australian government has introduced new laws that criminalise the deliberate underpayment of wages, commonly referred to as 'wage theft.' These legislative changes carry significant implications for businesses, making compliance with wage laws more critical than ever.

Understanding the new legislation:

Effective from 1st January 2025, the new laws impose severe penalties on employers who intentionally underpay their staff. The penalties include:

• Individuals: Up to 10 years in prison or fines reaching $1.65 million.
• Companies: Fines up to $8.25 million or three times the amount underpaid, whichever is greater.

These measures are designed to deter intentional exploitation of workers and promote fair compensation practices.

While the legislation specifically targets deliberate underpayment, all businesses must take proactive steps to ensure compliance. Recent reports indicate that nearly 20% of employers suspect they may be paying staff incorrectly. Even unintentional errors can lead to financial and reputational risks, making it crucial for organisations to maintain accurate payroll systems and stay updated on legislative changes.

How PKF Australia can assist:

At PKF, we understand the complexities of payroll compliance and the challenges businesses face in navigating these changes. Our services are tailored to suit your specific organisational needs, ensuring your payroll function remains fully compliant.

We offer:

• Comprehensive payroll reviews: Identifying risks and root causes of non-compliance.
• Routine payroll audits: Helping businesses maintain high levels of compliance over time.
• Advanced payroll reporting: Leveraging cutting-edge technology to provide detailed dashboards that offer clarity and actionable insights beyond traditional reports.

Key takeaways for businesses:

• Intent matters: Criminal penalties apply to deliberate underpayment. Honest mistakes, when promptly rectified, are treated differently.
• Stay informed: Regularly update your knowledge of wage laws and ensure your payroll systems reflect current standards.
• Seek assistance: Leverage PKF Australia’s expertise to ensure compliance and avoid costly penalties.

By prioritising fair pay practices and engaging with expert advisory services, businesses can foster a compliant and trustworthy workplace environment. PKF is here to support you every step of the way, ensuring your organisation meets its payroll obligations with confidence and accuracy.