Employers, particularly those in the multicultural communities, beware that since 1 January 2025, intentional underpayment of wages or entitlements has been a criminal offence. This doesn’t include honest mistakes.
There have been many cases where, among the multicultural community’s small business owners were requested / approached to employ untrained multicultural community members, who willingly accepted less than formal wage and to learn on the job and be able to pay for their basic necessity’s bills. That is wrong. Whether you are hiring a total novice, a fresher who you will be investing your time to train or a trained person fully equipped to do the job, you must pay their formal wage. Remember the same employees can go and complain to the Fari Work Ombudsman’s office and claim they were paid less than the formal wage they were entitled.
Many small business employers from our community, including Petrol station operators, were caught prosecuted by the Fair Work officers and later paid hefty penalties.
Let us make 2026 different, and do things right, do things different to cpmply with the law.
The law: On 1 January 2025, it became a crime. An employer commits a criminal offence where they:
- were required to pay an amount:
- to an employee such as wages or paid leave entitlements
- on behalf of the employee, or for their benefit, such as superannuation or a salary sacrifice arrangement
- have intentionally done something that intentionally results in those amounts not being paid on or before the day they were due.
Intentional conduct includes:
- taking an action, such as paying less than an employee’s minimum entitlements on purpose. For example, not paying the correct hourly rate or other entitlements such as penalty rates, overtime and allowances
- failing to take an action, such as not paying an employee on purpose.
Example: Intentional underpayment of wages
An employer paid an employee $12 per hour, knowing it was below the minimum wage. This meant the employer deliberately failed to pay their employee correctly. Because the employer’s actions were intentional, the underpayment could be a criminal offence.
Read some of our stories:
- Ankur Sehgal and his P’Nut Street Noodles chain allegedly underpaid almost $1 million
- R J Cornish, a Victorian fruit grower signs EU after unlawful wage deductions of $127,000
- Former United Petroleum outlet operator Navaneeth Gogikar penalised
- Baby Priya’s law: New protections for parents for employer funded parental leave
- Ashvinkumar Chavan’s fruit and veggie business ‘Strawberry Point’ in Forest Hill fined
- Good Thanks burger outlet operator fined $21,645 for underpayment of wages
- Art of Hair Bateau Bay operators Nelvin Lal and Cheri Rance face court for third time
An employer can be an individual or a company.
Fairwork can:
- investigate suspected criminal underpayment offences
- if there is sufficient evidence, suitable matters will be referred to the Commonwealth Director of Public Prosecutions or the Australian Federal Police for consideration and possible criminal prosecution.
Prosecution can result in monetary fines, prison time, or both.
As well as employers, other individuals or companies can also be prosecuted for their conduct relating to an offence, such as aiding an employer in committing the offence.
Exceptions
The criminal offence provisions don’t apply to all entitlements for certain employees. This broadly includes:
- employees in New South Wales, South Australia, Queensland, Tasmania and Victoria who are employed by sole traders, partnerships, other unincorporated entities, or non-trading corporations
- most Victorian state government employees
- Tasmanian local government employees.
Find out more about state referred businesses.
For these employees, the criminal offence provisions don’t apply for:
- superannuation contributions
- payment for taking long service leave
- payment for taking leave connected with being the victim of a crime
- payment for taking jury duty leave or for emergency services duties.
The criminal offence provisions apply to other wages and entitlements for these employees.
Cooperation agreements
An employer who has voluntarily told us about their conduct that could be a criminal offence can seek to enter into a written cooperation agreement with us. This stops us referring any conduct specified in that agreement for possible criminal prosecution. We may still take other enforcement action, such as starting civil litigation.
Learn more about cooperation agreements, including when and how they’re used and how to apply for one at Cooperation agreements.
Voluntary Small Business Wage Compliance Code
A small business employer can’t be referred for criminal prosecution by us if:
- they’ve underpaid an employee
- we’re satisfied that they’ve complied with the Voluntary Small Business Wage Compliance Code (the Code).
Learn more and download the Code at Voluntary Small Business Wage Compliance Code.
Help for small business employers to understand the code
Download the guide here. It will help you to pay employees correctly and provides the required Voluntary Small Business Wage Compliance Code help to:
- help pay employees correctly
- understand how the Code applies.
The Guide offers practical advice and tools including a checklist, case studies and best practice tips.
Referring matters for criminal prosecution
Our decision to refer matters for possible criminal prosecution will depend on whether we have enough evidence and whether it’s in the public interest. Our Compliance and Enforcement Policy Compliance and Enforcement Policy outlines the factors we will consider in more detail.
The Commonwealth Director of Public Prosecutions and the Australian Federal Police are the only bodies that can initiate legal proceedings for a criminal offence.
Fines and prison time
If a person is convicted of a criminal offence, a court may impose fines, prison time, or both.
For a company
If the court can determine the amount of the employer’s underpayment, the maximum fine will be the higher of:
- 3 times the amount of the underpayment
- $8.25 million.
If the court can’t determine the amount of the underpayment, the maximum fine is $8.25 million.
For an individual
The court can impose a maximum of 10 years in prison or a fine, or both.
If the court can determine the amount of the employer’s underpayment, the maximum fine will be the higher of:
- 3 times the amount of the underpayment
- $1.65 million.
If the court can’t determine the underpayment, the maximum fine is $1.65 million.
Source reference for page: Fair Work Act 2009 sections 327A–327C, 717A–717B.