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Criminal Prosecutions for Underpayment Under Awards

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From 1 January 2025, intentionally underpaying wages or entitlements has become a criminal offence, carrying significantly increased penalties for both individuals and corporations. The provision applies to underpayments occurring after this date, but can also capture prior conduct where it forms part of an ongoing course of action.

If you’re unsure about your obligations or entitlements, consulting experienced employment lawyers can:

• help clarify your responsibilities, or what’s owing to you; and
• reduce the risk to you and your business, or hold the relevant parties accountable.

Intentional Underpayment

Under section 327A of the Fair Work Act 2009, the following four elements must be proved:

1. The employer was required to pay a specified amount to, on behalf of, or for the benefit of an employee;
2. The required amount is not excluded by the provision;
3. The employer intentionally engaged in the conduct; and
4. That conduct intentionally resulted in the failure to pay the required amount on or before it was due.

Honest mistakes do not constitute an offence.

Establishing “Required Amount”

A required amount generally includes:

• Wages; and
• Paid leave entitlements.

An excluded amount includes:

• Superannuation contributions;
• Payments for taking leave connected with being the victim of a crime; and
• Payments for taking jury leave for emergency services duty.

Establishing “Intention”

The element of intention is critical. Intention is demonstrated when an individual deliberately engages in certain conduct with awareness of the likely outcome. For corporations, intention is inferred when the employer knowingly, recklessly, or intentionally authorised the conduct, or if the corporate culture supports or permits non-compliance.

Investigation Process

The Fair Work Ombudsman is responsible for investigating suspected underpayments. If there is sufficient evidence and the matter is in the public interest, the Fair Work Ombudsman may refer matters to the Commonwealth Director of Public Prosecutions or the Australian Federal Police for potential criminal proceedings. If an individual is convicted of a criminal offence, the Court can impose fines and/or imprisonment.

Maximum Penalties

Individual: 10 years of imprisonment or fines up to $1.565 million or three times the amount of the underpayment

Corporations: Fines up to $7.825 million or three times the amount of the underpayment.

For Employers

Cooperation Agreements and Voluntary Disclosure

Employers who voluntarily disclose their conduct that could be a criminal offence may seek a cooperation agreement with the Fair Work Ombudsman. This prevents the Fair Work Ombudsman from referring any conduct to the Prosecution, though other civil enforcement actions may still occur.

Small Business Protections

Small business owners who unintentionally underpay employees may be protected by compliance with the Voluntary Small Business Wage Compliance Code. If the Fair Work Ombudsman is satisfied that a business has adhered to the Code, it will not refer the matter for prosecution.

The Voluntary Small Business Wage Compliance Code is also a useful guideline for employers of all business sizes to ensure compliance with good business practice.

Conclusion

The introduction of criminal liability for intentional underpayment marks a significant shift in workplace compliance. Employers must take proactive steps to review payroll systems and ensure ongoing compliance to avoid exposure to criminal penalties.

If you believe you are being underpaid or suspect you may be underpaying an employee, contact Aitken Whyte Lawyers’ employment lawyers on 07 3229 4459. Our experienced Brisbane lawyers are results-driven and committed to protecting your legal rights.

Key Takeaway

Employees:

• Report suspected intentional underpayment to the Fair Work Ombudsman;
• Compile evidence to support your claim; and
• Seek legal advice from trusted employment lawyers to strengthen your case.

Employers:

• Review and monitor payroll practices for compliance;
• Implement risk management; and
• Seek legal advice from qualified employment lawyers if underpayments are discovered to mitigate liability.

Focused On Results

Are you facing wage disputes with your employer or with your employees? Are you unsure about your legal obligations as an employer? Take action and call Aitken Whyte Lawyers’ employment lawyers in Brisbane on 07 3229 4459. Our experienced lawyers can help you navigate complex workplace and industrial laws.

We’re focused on protecting your rights. Whether you’re an employee seeking fair compensation or a business owner needing guidance. Speaking to an employment lawyer who understands your situation can put you in the best position to get the results you need.

Office Location and Contact Details

Brisbane

Aitken Whyte Lawyers Brisbane
2/414 Upper Roma Street
Brisbane QLD 4000

Ph: 07 3229 4459
Fax: +617 3211 9311
E: enquiries@awbrisbanelawyers.com.au