In the 2024 financial year, the Fair Work Ombudsman (FWO) recovered $473 million in unpaid wages and entitlements for Australian employees, bringing its total back payments over the past three years to $1.5 billion.
More than half of last year’s recoveries of $333 million, came from large corporate employers. The regulator also secured major litigation wins and entered into enforceable undertakings with 15 large organisations requiring back payments to staff.
According to Tracy Angwin, Director of Australian Payroll Association, “While some underpayments are deliberate, most happen because payroll legislation is incredibly complex. The modern award system, multiple pay rules and technology errors can create a perfect storm if payroll isn’t monitored carefully.”
Criminal penalties now apply for intentional underpayment
From January 2025, changes to the Fair Work Act 2009 mean that deliberately underpaying employees is a criminal offence.
The FWO can now investigate suspected criminal wage theft and refer serious matters to the Commonwealth Director of Public Prosecutions or the Australian Federal Police.
If convicted, individuals face fines of up to $1.65 million or 10 years in prison, or both. Companies risk fines of up to $8.25 million, or three times the amount underpaid, whichever is greater.
“These aren’t just bigger fines, they’re game changing consequences,” says Angwin. “Board members and executives need to understand that wage compliance is no longer just an HR or payroll issue. It’s a governance and personal liability issue.”
Higher civil penalties for larger businesses
The reforms also increase civil penalties for businesses with 15 or more employees that breach workplace laws, including the National Employment Standards, award or agreement obligations, payslip and record keeping requirements, or compliance notices.
Small business protections
Small employers (fewer than 15 staff) have access to new safeguards. The Voluntary Small Business Wage Compliance Code allows those who follow it and whose underpayment was unintentional, to avoid criminal prosecution.
Any employer, regardless of size, can also request a cooperation agreement with the FWO if they self report conduct that could amount to a criminal offence.
“Small businesses now have a safety net if they genuinely make a mistake and take steps to fix it,” Angwin explains. “But it’s not a free pass, the Code requires following best practice payroll processes.”
A push for proactive compliance
Legal specialists expect early prosecutions to focus on clear, intentional underpayments.
“The safest path for employers is to act before problems arise,” says Angwin. “That means regular payroll audits, seeking expert advice, and making sure pay rates are updated with every wage increase or award change.”
Angwin warns that accessorial liability remains a serious risk: “It’s not just the company that can be in the firing line, directors, managers and even external payroll providers or accountants can face prosecution if they’re involved in underpayments.”
