From 1st January 2025, the Fair Work Ombudsman will have new powers to refer an employer for criminal prosecution if the employer is required to pay an amount (such as wages or paid leave entitlements), AND they intentionally take (or don’t take) action that intentionally results in the payments/entitlements not being made as and when they are due.
If ultimately convicted of an offence, fines for companies can reach the higher of 3x the amount of the underpayment, or $8.25m (or $1.65m for individuals). Individuals may also be subject to up to 10 years imprisonment.
The legislation is NOT intended to punish employers for making honest mistakes, though the legislation does in our view require employers to exercise a higher level of care (and be able to demonstrate, if required, that they have in fact taken all due care) to ensure they are aware of and meet their obligations to pay their employees correctly.
There are a few modest exceptions that apply, and small businesses (with fewer than 15 employees) may be able to limit the potential for prosecution if they are able to demonstrate compliance with the Voluntary Small Business Wage Compliance Code.
Additional information regarding the new requirements, and a link to the Voluntary Small Business Wage Compliance Code, is available on the Fair Work website here.
Keen to ensure you are aware of and able to meet your obligations in advance of the legislation commencing? Our FREE HR Compliance Scorecard is designed specifically with SMEs in mind. It’s confidential, without obligation, takes less than 10 minutes and you’ll receive a comprehensive report to help you meet your responsibilities. Click to access the Smallbiz HR Compliance Scorecard.
This article includes general information and is a summary only. It is not formal or legal advice. Information is we believe current and accurate at the time of publication – 16/12/2024.
