Wage theft laws in Australia: What employers need to know

Are you paying your employees correctly? The consequences of getting it wrong have recently become a whole lot more severe.

It’s now considered a criminal offence for businesses and individuals to deliberately underpay their employees. With severe penalties, including prison, understanding your obligations has never been more important. 

We know it can be hard to stay on top of changes like this, but that’s where we can help. We’ve put together an in-depth guide to help you navigate the wage theft laws, so you can stay across your employer obligations and minimise your risk. 

Download the guide now using the form on the right.

Understanding wage theft laws in Australia  

From 1 January 2025, these laws mean that deliberate and intentional underpayment of staff is now a criminal offence in Australia. These new laws also mean that individuals who are decision-makers in a business can be penalised, not just the business itself. 

The scope is broad, which is why all employers, regardless of business size or location, need to be across their legal responsibilities. 

What counts as wage theft?

Wage underpayment covers things like:

• Not paying sufficient wages, including penalty rates, overtime rates and/or allowances (or not paying them at all).
• Not paying other amounts required by the applicable award or enterprise agreement.
• Not paying superannuation.
• Failing to pay any of these amounts in full either on/or before the day they’re due to be paid.

Wage theft only applies to conduct that is deemed to be “intentional”.

Intentional conduct includes: 

• Taking an action, such as purposefully paying less than an employee’s minimum entitlements.
• Failing to take an action, like purposefully not paying an employee at all.

Penalties for non-compliance

For businesses who deliberately underpay their employees, there will be two types of penalties. Penalties apply for the company responsible, and/or for the individuals who engage in conduct relating to underpayment. This could be a business owner, senior manager, payroll officer, accountant or any other person actively involved in a deliberate underpayment.

As per guidance from the Fair Work Ombudsman, the following penalties apply for a company that commits wage theft: 

• If the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $8.25 million, or
• If the court can’t determine the underpayment, $8.25 million.

As per guidance from the Fair Work Ombudsman, the following penalties apply for an individual that commits wage theft: 

• Up to 10 years in prison.
• If the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $1.65 million, or
• If the court can’t determine the underpayment, $1.65 million.

Understanding the Closing Loopholes legislation

The new wage theft laws have been made through the Government’s Closing Loopholes legislation. This was introduced through the Fair Work Amendment (Closing Loopholes) Bill 2023 and the Fair Work Amendment (Closing Loopholes No.2) Bill 2023. These regulatory reforms have brought significant changes to Australia’s workplace laws and with that, new wage governance standards for employers. 

Learn more about these changes in our Closing Loopholes guide or download our employment law updates factsheet.

How to manage wage compliance in your business

Staying on top of wage compliance is essential for protecting your business and your employees. Here’s how you can confidently navigate this critical responsibility. 

Conduct payroll audits regularly

Penciling in time for regular payroll audits is your first line of defense against compliance issues. By reviewing your payroll processes and records, you can identify and correct errors before they become costly problems and non-compliance risks. 

Employment Hero’s automated payroll system simplifies this process, with built-in award rates and entitlements. Plus, it keeps all your documentation in one place, making audit time easier than ever.

Update employment contracts and policies

Employment laws and regulations are always changing and your contracts and policies need to keep up. Regularly review and update employment agreements to reflect the latest legal requirements. 

Maintain transparent record-keeping

Proper documentation is one of the most simple ways to stay on top of your compliance obligations. Digital record systems and timesheet tools not only make it easier to track hours worked but also provide a clear audit trail. 

Employment Hero’s time and attendance tools integrate seamlessly with payroll, ensuring accurate records and reducing the risk of disputes. With everything stored securely in the cloud, you’ll always have the data you need at your fingertips.

How Employment Hero helps businesses manage compliance

Does all of this talk about employment law have you feeling overwhelmed and confused? We don’t blame you. It’s some tricky business.

Thankfully Employment Hero is purpose-built to navigate changes like these and so much more. With in-built modern award interpretation, a powerful payroll engine and a 1600+ strong team of employment experts, our Employment Operating System can help you confidently manage all your employer obligations. 

If you’re looking for additional help, our HR advisory service can help you with unique advice specific to your business. With a team of HR experts on hand who know the ins-and-outs of employment law, it means you can focus on the growth of your business instead of compliance.

With HR advisory, you can access HR and employment advice, compliance checks, approved tools and templates and even legal representation. HR Advisory is here to give you the confidence and peace of mind to manage your workforce, boost your compliance confidence and get you back to focusing on your business.

If you’d like to learn more, get in touch with one of our business specialists today.

Download the wage theft compliance guide

We’ve created this comprehensive guide to give you the confidence to pay your staff accurately and meet your legal obligations. It’s packed with actionable steps and clear explanations to help you protect your business and support your team.

Stop reacting to compliance risks and start proactively managing them. Download our free Wage Theft Compliance Guide now for the step-by-step support you need to pay your team correctly, every time.

Disclaimer: The information in this guide is current as at 15 October 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this guide are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this guide. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this guide.