Have you ever looked at your payslip and thought that something isn’t right? Maybe your hourly rate seems too low, you’re not getting paid for overtime, or your superannuation hasn’t been paid into your account. These situations, if they are not honest mistakes, could be a form of wage theft.
This article explains what ‘wage theft’ means, the national laws that make it a criminal offence, and the practical steps employees can take if they believe their employer is deliberately underpaying them.
The information is general only and does not constitute legal advice. For help and guidance with any workplace matter, we recommend you speak with an experienced employment lawyer.
Wage Theft Laws in Australia
In Australia, the law now takes a serious stance on the issue of wage theft. From 1 January 2025, intentionally underpaying an employee’s wages or entitlements can be a criminal offence, as provided in the national Fair Work Act (Cth) 2009. Employers can face criminal penalties for intentionally underpaying their staff.
These laws complement or reinforce existing legislation in some other jurisdictions, such as Queensland and Victoria, that already criminalise the deliberate underpayment of wages.
What is ‘Wage Theft’ and What are the Red Flags?
Wage theft is the deliberate and dishonest underpayment of an employee’s correct wages and entitlements. This is different from an honest mistake, which can happen in any business due to a payroll error or a misunderstanding of an award or agreement.
Wage theft can include:
- Paying less than the legal minimum wage: This is the most straightforward form of wage theft. The Fair Work Act mandates a national minimum wage, which is reviewed annually by the Fair Work Commission. This provision ensures that all employees receive a fair and reasonable wage for their work, regardless of their industry or occupation.
- Not paying for all hours worked: This might include the requirement of unpaid ‘trial shifts’ or asking an employee to work off the clock.
- Not complying with modern awards/enterprise agreements: Modern awards are industry, or occupation, specific legal documents that outline minimum pay rates and employment conditions for specific sectors. Enterprise agreements are negotiated between employers and employees (or their unions) and provide tailored conditions for a particular workplace. Both instruments play a role in preventing wage underpayment by setting clear and enforceable standards. Deliberately failing to pay penalty rates such as for evening, weekend, or public holiday work, or not paying for overtime or allowances as provided for in an award or an agreement, could constitute wage theft.
- Underpaying or not paying superannuation: The Superannuation Guarantee (Administration) Act 1992 (Cth) requires employers to pay a percentage of their employees’ earnings into a superannuation fund.
- Incorrectly classifying a worker: An employer might call a worker a ‘casual’ when their working pattern suggests they are a permanent employee or classify the employee in a lower pay bracket than the job requires.
Taking Action
If you suspect you’ve been a victim of wage theft, it is important to approach the situation in a calm, methodical way. Here are the steps you can take:
Step 1: Check Your Entitlements
First, you need to be sure that you have been underpaid. You can use the Fair Work Ombudsman’s Pay and Conditions Tool to check your correct pay rates, including any penalty rates or allowances that apply to your industry award. This will give you a clear picture of what you should have been paid.
Step 2: Gather Evidence
Once you know what you should be paid, you need to collect evidence to support any action you might take. Your best resources are:
- Your payslips: If your employer provides them, check them carefully. Do the hours and pay rates look correct?
- Your bank statements: These show exactly what you have been paid.
- Your own records: Keep a diary or use an app to record the hours you work, including any overtime, breaks, and the tasks you performed. This can be your timesheet if your employer has not kept accurate records.
Step 3: Talk to Your Employer
The thought of confronting your employer may seem daunting, but sometimes underpayments are just an honest mistake. Try to arrange a private meeting with your employer or a manager and present your findings calmly and factually. It’s a good idea to write down what was discussed and any agreement reached. If you’re a member of a union, you can ask a union representative to come with you.
Step 4: Contact the Fair Work Ombudsman
If talking to your employer doesn’t work, or you don’t feel comfortable doing so, you can make a formal complaint to the Fair Work Ombudsman (FWO). This is the government body responsible for investigating and prosecuting wage theft.
The FWO can:
- Investigate your complaint
- Contact your employer on your behalf
- Mediate a resolution between you and your employer
- In serious cases, take legal action against your employer to recover your unpaid wages and seek penalties
You can also make an anonymous tip-off to the FWO if you’re not ready to make a formal complaint but want to report a problem.
Step 5: Consider Legal Action
If all else fails, you may need to consider taking legal action to recover your unpaid wages. This is often done in a court, such as the Federal Circuit and Family Court of Australia.
The court process can be complicated, but there is a small claims procedure for amounts of $20,000 or less, which is designed to be more accessible for individuals without a lawyer. However, a lawyer can help you understand your options, represent you, and ensure you have the best chance of recovering what you are owed.
Conclusion
From 1 January 2025, deliberately underpaying an employee is a criminal offence across Australia. If you are a victim of wage theft, there are resources and legal pathways available to help you get the money you are owed.
If you or someone you know wants more information or needs help or advice, please call (02) 5127 5261 or email [email protected].