As of 1 January 2025, significant changes to Australia’s employment law landscape have come into force. Employers in New South Wales—and across the country—must now be aware that intentional wage underpayment is a criminal offence, carrying serious legal consequences for individuals and companies alike.
These changes mark a pivotal shift in how wage compliance is enforced and underscore the need for robust payroll systems and HR processes.
What Has Taken Effect?
Under the Closing Loopholes reforms passed by the Federal Government, it is now a criminal offence for an employer to intentionally underpay employees.
Penalties include:
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Up to 10 years’ imprisonment for individuals;
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Fines of up to $7.825 million for companies;
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Further penalties where underpayments form part of a systemic issue.
These laws were introduced in response to high-profile wage theft scandals and aim to restore integrity to Australia’s workplace relations system.
Who Is Affected?
All employers—regardless of size or industry—must now comply with the new regime. This includes small businesses, franchises, and large corporations operating in NSW. Businesses relying on awards, enterprise agreements, or the national minimum wage must be particularly vigilant.
What Counts as “Intentional” Underpayment?
The criminal offence targets deliberate conduct. If an employer knowingly fails to pay correct wages, superannuation, or entitlements, they may face prosecution.
Importantly, genuine mistakes or administrative errors will not amount to a criminal offence—but employers may still face civil penalties under the Fair Work Act 2009 (Cth).
Failure to take proactive steps to ensure compliance will not be excused.
What Should Employers Do Now?
With the new laws in effect, all businesses should take the following steps immediately:
- Conduct a payroll audit – Review current pay structures and ensure alignment with award and agreement entitlements.
- Verify employee classifications – Misclassification remains one of the most common causes of underpayment.
- Train HR and payroll staff – Ensure your internal teams are across the new obligations.
- Implement or update wage compliance policies – Have a clear internal policy in place for identifying and addressing issues.
- Act quickly on staff concerns – Promptly investigate and resolve any pay disputes or complaints.
The Compliance Landscape Has Changed
The introduction of criminal penalties means wage compliance must be treated as a core legal and reputational issue. Businesses that fail to take proactive steps risk serious consequences—including public scrutiny, financial penalties, and prosecution.
How MCB Lawyers Can Help
At MCB Lawyers, we work with businesses across NSW to strengthen compliance, resolve disputes, and ensure workplace obligations are clearly understood and properly implemented. If you’re unsure whether your business meets the new standards, or if you’ve identified potential underpayments, we can help.
Call MCB Lawyers on 02 9977 1133 or email us at admin@MCB lawyers.com.au to find out how we can help.
Further Resources and Legal Support
If you’re a business owner on the Northern Beaches needing guidance on the new wage theft laws or other aspects of commercial law, the following resources may help:
Internal Resources
External Resources
Need help? If you’re concerned about your business’s compliance or have received a complaint, MCB Lawyers is here to assist. Our experienced commercial lawyers in the Northern Beaches can guide you through your legal obligations and represent you if needed.
📞 Contact us today or book a consultation online to speak with our team.
Disclaimer: This blog post is for general information only and does not constitute legal advice. Please seek tailored legal advice before acting on any of the information provided.