A federal criminal offence of wage theft will apply to intentional underpayments made after 1 January 2025.

Small business employers will not be referred for criminal prosecution where they comply with the Voluntary Small Business Wage Compliance Code (Code).

The Fair Work Ombudsman (FWO) has now issued the Code, which identifies various actions small businesses can take to demonstrate that any failure to pay employees correctly was not intentional. If the FWO is satisfied the underpayment was not intentional, the employer will be taken to have complied with the Code (and therefore, not be liable to be referred for potential criminal prosecution).

The actions small business employers may take to comply with the Code centre on making reasonable efforts to ascertain correct rates of pay and to stay up to date with changes, employer actions to rectify underpayments, and cooperation with the FWO.

There is a particular emphasis on small businesses seeking reliable, expert advice on pay and other compliance obligations, such as that provided by Ai Group and our Workplace Advice Line.