Compliance and enforcement: Criminalising wage theft

Issues

Wage underpayment continues to feature across a range of Australian workplaces, from small business to large corporations, leaving workers out of pocket and forcing those businesses that follow the law to compete with businesses that have an unfair advantage. Underpayment has been the subject of extensive media reporting and several inquiries, including the 2022 Senate inquiry into the unlawful underpayment of employees’ remuneration.
The Australian Government has committed to introducing a criminal offence for wage underpayment, implementing the recommendation of the Migrant Workers’ Taskforce to introduce a criminal offence for the most serious forms of exploitative conduct and to increase penalties for contraventions of wage exploitation-related provisions of the Fair Work Act.
The measures to criminalise wage theft are proposed to:
- introduce criminal offences into the Fair Work Act for wage underpayment and record-keeping misconduct
- amend the existing civil compliance and enforcement framework, including the serious civil contraventions regime, to ensure that the framework contains a sensibly graduated scale of penalties to address the full spectrum of non-compliance with workplace obligations
- increase maximum penalties for wage exploitation-related civil remedy provisions in the Fair Work Act and strengthen protections against sham contracting arrangements.

Underpayment can arise from a range of conduct, spanning from honest mistakes to deliberate non-compliance.
The compliance and enforcement framework in the Fair Work Act should be strengthened to offer a range of enforcement tools to responsively address and adequately deter wrongdoing and drive cultural change amongst employers.
The framework should continue to support businesses to self-report and work with the Fair Work Ombudsman to fix the issues, while also ensuring workers are repaid quickly.
Criminalising the non-payment and underpayment of wages is intended to deter harmful misconduct by increasing the cost of non-compliance, particularly for those businesses who consider current penalties low enough to form part of the cost of doing business.
Criminal penalties should not apply to employers who make an honest mistake and take steps to fix it.

The department is seeking views on the following issues:

Should a wage underpayment offence apply to conduct which is more serious than an honest mistake, but falls short of deliberate underpayment?
What is the appropriate penalty for a wage underpayment offence?
How does the serious civil contraventions regime fit sensibly with new criminal offences?
Which method should be used for increasing maximum civil penalties?
Noting that increasing the likelihood of detection for wage underpayment is also important, are there opportunities for increased detection that should be considered alongside changes to the civil framework?