Not paying your employees correctly is becoming a criminal offence

Wednesday September 23, 2020

Every business wants to attract and retain good staff. That’s why it’s essential to ensure you are paying them correctly. The problem is, it’s complex. That’s one of the reasons many business owners are being accused of wage theft, and now it’s getting serious.

Wage theft is becoming a punishable offence

In Queensland, legislation has just been passed that makes wage theft a criminal offence. What this means is directors and business owners in Queensland who knowingly underpay staff can face both jail time and harsh penalties.

Victoria has followed suit and has also passed a Wage Theft Bill, although this is not yet in effect. The Victorian Bill covers businesses based in Victoria who pay for local, national or international staff as well as businesses outside of Victoria who have employees that perform most of their duties within the state of Victoria.

While it’s not yet a criminal offence in all states, there is a genuine possibility the remaining states will follow suit.

The laws are very clear about the definition of wage theft, defining it as ‘knowingly underpaying employees‘. This means, those who have done so accidentally will not face the same ramifications. However, this does not mean businesses receive a ‘Get out of jail free‘ card. Non-compliance can result in hefty fines, bad PR, and now jail time in some states.

The impacts of underpayment go further than the potential penalties. Failure to pay employees correctly can also result in stress, poor mental health and lower productivity.

The Fair Work Ombudsman is actively investigating businesses throughout Australia who may be underpaying their staff. They have indicated a high percentage of businesses are non-compliant simply because they aren’t aware of the laws. Sadly, that is no excuse, and the employers who are found guilty still face ramifications such as having to back-pay employees.

How do employers ensure they are doing the right thing?

It’s more essential than ever for employers to ensure they are paying employees correctly. That includes:

  • Correctly classifying employees under the applicable Awards
  • Correctly paying their employees under their appropriate Awards or enterprise agreements
  • Correctly applying employee allowances, penalty rates and other relevant entitlements
  • Keeping up to date with changes and updates to Fair Work regulations and requirements

Help is at hand

For many small and medium-sized businesses, staying on top of all the changes to Awards and Fair Work regulations is an impossible task. But this is where we can step in. The HR Dept has experts who can help you make sure you are doing all the right things regarding employee payments and entitlements. As well as help you to ensure your past and present HR processes are correct.

If you have any questions or concerns, give our friendly, expert team a call.


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