23 May 2025
On 1 January 2025, amendments to the Fair Work Act 2009 came into effect. Part of the Closing Loopholes changes, these amendments introduced criminal penalties for employers who intentionally underpaid workers. And they weren’t limited to wages alone: the amendments also extended to leave entitlements and superannuation obligations.
The Fair Work Act 2009 (the Act) is critical legislation that governs employer and workplace relations, establishing a national framework for workplace rights and obligations while providing a minimum level of entitlement for employees.
“While the Act has been around for some time now, the new amendments make it crystal clear to both employers and employees that they have rights regarding their wage payments, paid leave entitlements, and superannuation obligations,” says AR & B Advisors Principal, Jason Barbetti.
Underpaying employees is now a criminal offence
The rules are being tightened to eliminate wrongdoing and provide more security for Australian workers. Known as wage theft provisions, new section 327A(1) of the Act introduces changes to clamp down on an issue that has seen a number of prominent Australian employers dragged before the courts.
Now, the Fair Work Ombudsman will be able to pursue companies doing the wrong thing under criminal laws, rather than just civil laws. The Act itself goes beyond wages, extending to award rates, leave entitlements, and even ATO superannuation guarantee obligations.
Historically superannuation is something that’s more likely to be missed or underpaid by employers. But times are changing. Employees are becoming more familiar with their rights and super guarantee contributions. The advent of online superannuation has provided more visibility over what an employee is receiving, and single touch payroll has made it easier for the government to track payments to employees.
The amendments to criminalise wage underpayments give employees more recourse, and better support, to do something about this issue. The changes are designed to help employees feel more in control, with confidence to speak out if they believe they are being underpaid in any way.
“It’s at the behest of the employer to know what they should be doing. The last thing they want is to be dobbed in by an employee and have the Ombudsman showing up at their door,” cautions Jason.
The amendments make sure that employers follow the rules—or face serious consequences.
What this means for businesses and business owners
“The truth is that most businesses are doing the right thing,” says Jason. “Well-managed businesses won’t need to worry about these changes—it’s purely for those instances of intentional underpayment where businesses have a culture of taking advantage of their workers.”
While an unintentional underpayment isn’t cause for concern, it can still attract the attention of the Fair Work Ombudsman.
Under the new legislation, the Ombudsman can investigate suspected criminal underpayment offences. Any such matters will be referred to either the Commonwealth Director of Public Prosecutions or the Australian Federal Police. Businesses and business owners found liable may now face penalties, fines, and potential criminal offences.
For businesses, they face a maximum fine penalty of three times the underpayment amount, or $8.25 million, whichever is greater. Serious contraventions increase the maximum penalty that the courts can impose by up to five times the underpayment amount.
Individuals, such as Directors or officers, who knowingly engage in wage theft can face fines of either three times the amount of the underpayment, or $1.65 million, whichever is greater, and a maximum 10 years’ prison sentence.
However, businesses do have the opportunity to self-report. If they believe they have underpaid their workers, and voluntarily notify the Fair Work Ombudsman, a business can enter into a written agreement that circumvents a criminal prosecution.
How to stay on the right side of the Fair Work Act amendments
For business owners, it’s all about understanding the changes and how they affect their employees’ entitlements. Staying abreast of the changes is particularly crucial when it comes to an employer’s superannuation obligations, which is in a state of flux at the moment.
On 1 July 2024 the ATO superannuation guarantee rate was increased to 11.5%. A significant change, yet one that may not have been implemented by employers across the board. Not through any malicious intent, of course, but more likely through lack of oversight. The next change comes into effect on 1 July 2025, when the superannuation guarantee rate increases again to 12%—a date all employers should be prepared for.
“These changes are a wake-up call for businesses and employees,” says Jason. “While most companies will be actively doing the right thing, it’s when you put things on autopilot that cracks start to appear.”
The first step is being prepared
Business owners should go to the Fair Work Ombudsman website and review the changes to the Act; track these against their employee wages, benefits, and superannuation entitlements, and ensure they’re paying the right amounts under the right awards.
While the majority of businesses will be doing the right thing by their employees under the Fair Work Act 2009, mistakes can still happen. That’s why it’s vital to be aware of these changes, have them front of mind, and take an active role in ensuring employees are receiving the right pay, leave entitlements, and super guarantee contributions.
AR & B Advisors is here to help businesses do the right thing by the Act, and by their employees. We can help you review your wages, leave, and superannuation guarantee payments, and ensure that you’re acting with everyone’s best interests in mind. Contact our expert business advisors today to discuss how we can help you navigate your superannuation and wage obligations.