Wage theft, a fancy term for bosses not paying workers what they’re owed has been a hot topic in Australia. After years of scandals (a case where a restaurant chain copped a record $15.3 million fine for underpaying 163 workers), the government is cracking down. As of 1 January 2025, deliberately underpaying an employee is now a criminal offence in Australia under new federal law. This change means that dodgy employers who intentionally shortchange staff could face serious penalties even jail time for wage theft. Below, we break down what this means for both workers and employers.
What is Wage Theft?
Wage theft basically refers to any situation where an employer doesn’t pay the full wages or entitlements that a worker is due. This can take many forms: deliberate underpayment of wages, unpaid overtime or penalty rates, withholding of superannuation, or not paying out leave that an employee has earned. It’s called “theft” because it’s effectively stealing money that should be in workers’ pockets. In Queensland, for example, wage theft has already been a crime for a few years – employers caught intentionally underpaying staff there can face up to 10 years’ imprisonment. Now the rest of Australia is following suit by criminalising intentional underpayments at the federal level.
New Australian Wage Theft Laws in 2025
Under Australia’s wage theft laws commencing 2025, it’s a criminal offence for an employer to intentionally underpay an employee’s wages or entitlements. Importantly, honest mistakes aren’t treated as crimes; the law targets deliberate, intentional wage underpayments (so if a boss genuinely messes up the math but fixes it, that’s a civil issue, not a crime). However, “I didn’t know” won’t cut it if there’s evidence the underpayment was on purpose or reckless. The Fair Work Ombudsman (FWO) can now investigate suspected wage theft and refer cases for criminal prosecution, where convicted bosses could face hefty fines, prison time, or both.
Tip for employers: The government has built in some safeguards for those who want to do the right thing. A Voluntary Small Business Wage Compliance Code is in place to protect small businesses from prosecution if they genuinely didn’t mean to underpay and they fix issues proactively (Fair Work Ombudsman). Similarly, any employer can come forward and sign a “cooperation agreement” with the FWO if they discover a serious underpayment – this basically means you agree to rectify the problem and the FWO agrees not to refer you for criminal charges in relation to that conduct. These measures are designed to encourage employers to self-correct mistakes quickly, rather than cover them up.
What Workers Need to Know (Your Rights)
If you’re a worker, you have the right to be paid what you’re owed – every cent. This includes at least the minimum wage, casual loadings, overtime, penalty rates, allowances, and any other entitlements in your award or agreement. You also must receive a pay slip within one working day of being paid, showing all the details of your pay and any deductions – it’s the law for employers to provide this (no more “the dog ate my pay slip” excuses!). Employers are required to keep accurate pay records for at least 7 years, so there’s a paper trail if things go wrong. If these basics aren’t happening, it’s a red flag.
Wage theft being a criminal offence means you have stronger protection. If your employer knowingly rips you off, they’re not just breaking some obscure rule – they’re committing a crime. For you, this hopefully means fewer bosses will change it, and those who do can be held to account in court. You can report wage theft or unpaid wages to the Fair Work Ombudsman (anonymously, if you’re worried about repercussions) – the FWO can investigate and now even help trigger criminal charges for the worst offenders. And don’t worry about being sacked for speaking up; it’s unlawful for an employer to fire or penalise you for chasing your proper pay or contacting the FWO.
Can you still claim back unpaid wages? Absolutely. Even with criminal laws in play, your ability to reclaim what you’re owed hasn’t changed. In fact, it’s reinforced. You generally have up to 6 years to claim unpaid wages or entitlements that your boss owes you, whether you’re still employed or have left the job. Many cases can be resolved through Fair Work’s processes or small claims court. For instance, the Law Handbook (SA) notes that the South Australian Employment Tribunal and the federal courts can handle underpayment claims – often in a relatively simple, low-cost way (Law Handbook SA). The bottom line: if you’ve been underpaid, you can get that money back. Don’t let a dodgy boss tell you otherwise.
What Employers Need to Know (Staying on the Right Side of the Law)
For employers (big or small), the message of these reforms is clear: pay your people what they’re owed, on time, every time. If you intentionally underpay staff in 2025 and beyond, you’re playing with fire – the stakes now include criminal prosecution, not just an order to back-pay or a slap-on-the-wrist fine. Every business should immediately review their payroll and record-keeping practices. Make sure you’re up to date with the latest award rates and minimum wage (for example, as of July 2025 the national minimum wage is $24.95/hour for full-timers). Ensure all overtime, penalty rates, super contributions, and leave are being correctly accounted for. Keep proper records and issue pay slips without fail – Fair Work inspectors won’t be impressed by shoddy paperwork or excuses.
If you discover an underpayment, don’t panic – fix it fast. The Fair Work Ombudsman’s official guidance for employers who think they’ve underpaid someone is to promptly calculate what’s owed and pay it, then inform the employee and the FWO of the mistake (Fair Work Ombudsman advice). Taking initiative can help show it was an honest error. In contrast, trying to cover it up (for example, falsifying pay records as seen in the Sushi Bay saga) is a recipe for disaster – it turns a bad situation into a potential criminal case. Remember, the new law distinguishes intentional wage theft from mistakes. So build a culture of compliance: audit your payroll, get HR or a legal expert to double-check tricky award provisions, and educate your managers. If you’re a small business, look into the voluntary compliance code – following that can shield you from prosecution by proving you’re acting in good faith to pay correctly (Fair Work Ombudsman – Small Business Code). Simply put, doing the right thing by your workers is not only morally right – it’s now the only smart legal move.
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FAQs About Wage Theft in Australia (2025)
Q1: Is wage theft a crime in Australia now?
A1: Yes. From 1 Jan 2025, intentional underpayment is a criminal offence. Genuine mistakes that are fixed aren’t criminal.
Q2: Can I claim unpaid wages in Australia?
A2: Yes—generally up to 6 years. Start with your employer; if unresolved, contact the Fair Work Ombudsman or use small claims. This applies even if you’ve left or were sacked.
Q3: What are the penalties for wage theft?
A3: Individuals: up to 10 years’ jail and $1.65m or 3× the underpayment (whichever’s higher). Companies: up to $8.25m or 3×. Civil fines still apply for non-criminal underpayments.
Q4: How do I report wage theft or get help?
A4: Report to the FWO (online/phone; can be anonymous). Unions and community legal centres can assist. Visa holders have the same rights.
Q5: Does the new law apply to small businesses?
A5: Yes. The criminal offence covers all employers. Small businesses can use the voluntary compliance code to avoid criminal referral if they fix problems quickly.
Q6: What records should I keep as an employee?
A6: Pay slips, timesheets/rosters, bank statements, contracts, messages about hours and rates.
Q7: Does superannuation underpayment count as wage theft?
A7: Intentional non-payment of required super can be part of wage theft and other breaches.
