From 1 January 2025 the new Wage Theft provisions come into effect. These provisions dramatically increase the penalty rates for systemic wage theft and record keeping breaches as well as introducing criminal penalties and jail time. To arm employers with a roadmap to compliance the Fair Work Ombudsman has published a Guide for Small Businesses on how to comply with the new provisions and avoid criminal liability through demonstrated compliance. While the Guide is specifically for small businesses it is touted by the Ombudsman as a ‘Blueprint’ for all businesses, of all sizes, on how to demonstrate compliance in the new employment landscape.
The Closing the Loopholes changes that were made the Fair Work Act late in 2023 have created a criminal offence around wage theft. As ACAPMA covered here the offence carries a 10 year jail term.
In releasing the Guide this week the Fair Work Ombudsman Anna Booth drew attention to the fact that there are only two avenues that offer protection from criminal liability, two ‘safe harbours’ that businesses can approach.
The first is for small businesses that follow the forthcoming Small Business Breach Compliance Code.
The second involves “cooperation agreements”, which are available to all employers that self-report matters that would otherwise expose them to criminal liability. Ms Booth emphasised that the cooperation agreements won’t be available if the Fair Work Ombudsman identifies underpayment through an investigation or a pro active visit, only if the business self reports.
But when an errant employer self-reports, even where it indicates intent, there is the avenue of a cooperation agreement, designed to “incentivise good behaviour”, that will prevent the referral of criminal conduct to the Commonwealth Director of Public Prosecutions or AFP for prosecution.
“They actually reward good behaviour”, which involves “voluntary, frank and complete disclosure”, along with “ongoing cooperation and provision of information,” the Ombudsman said.
To assist businesses in understanding how to demonstrate compliance the Fair Work Ombudsman has published a Voluntary Small Business Wage Compliance Code and the Ombudsman’s Guide. The Guide offers practical advice and tools such as a checklist, examples and tips for ensuring they are paying workers correctly and for fixing errors.
Steps spelt out in the checklist include finding the relevant award or agreement, ensuring workers are correctly classified, finding out what might change their pay rates and entitlements, following pay slip and record-keeping obligations, and staying up to date with workplace laws.
If an employer “satisfies the code”, the Fair Work Ombudsman says it cannot refer their conduct for possible criminal prosecution or enter into a cooperation agreement. It can still consider other enforcement options, however, such as compliance notices, enforceable undertakings or civil litigation.
The Guide says small businesses do not have to “check off every factor in the code to get the benefit of the code, and no one factor is critical”. The Fair Work Ombudsman says it will instead “look at the overall picture and the business’ particular circumstances where an underpayment has occurred to determine whether the code has been complied with”.
More Information
- Department of Employment and Workplace Relations – Criminalising Wage Theft Factsheet
- Voluntary Small Business Wage Compliance Code
- Fair Work Ombudsman – Small Business Guide to Complying with the Code and Paying Correctly
- Fair Work Ombudsman – General Information
Here to Help
ACAPMA members are reminded that ACAPMA has a series of resources from Quick Reference Guides to template letters and investigation and reporting checklists that can assist with ensuring compliant and consistent responses in this area, and can call on the advice and support of the ACAPMA Employment Professionals via employment@acapma.com.au .
HR Highlights are things to consider, implement and watch out for in your business.
They are provided as general advice and you should seek further advice on your situation by emailing employment@acapma.com.au it’s free for members.
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