DID YOU KNOW over the past 3 years, the Fair Work Ombudsman has reported that it has recovered $1.5 billion worth of underpayments for workers?

After extensive research which found that workers are losing up to $1.35 billion dollars of wages they are entitled to annually. From January 2025, criminal sanctions were introduced into the legislation for employers found to have intentionally or recklessly underpaid their employees.

Some of the important changes

1. The maximum penalty for a company can be the greater of three times the value of the underpayment, or up to $8.25 million in fines.
2. An individual can face up to 10 years imprisonment and $1.65 million in fines.
3. The threshold for proving a “serious contravention” of the Fair Work Act has been lowered. A serious contravention can now be made out where an employer has underpaid workers knowingly or recklessly, as opposed to knowingly and systematically.

Application of the new laws

Some insight into the framework currently relied on by the courts when determining penalties can be taken from the case of Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No 2) [2024] FCA 76, where the Court considered:

1. How long the contravening conduct took place for;
2. What penalty is necessary to discourage others from committing a similar offence; and
3. Whether the company has a corporate culture conducive to compliance.

In this case, the Court found that the directors of the Respondent company were liable, and as a consequence of the underpayment, issued fines totalling $15.3 million on the directors as individuals.

Under the new legislation, with a lower threshold for serious contraventions, harsher civil penalties and the introduction of criminal sanctions, employers must take steps to ensure they are complying with their obligations under Fair Work Act and other regulations when it comes to paying their workers.

How can Grazia Legal help?

We are expert employment lawyers who can ensure you are adhering to legislation, and eliminate any risk of you underpaying your employees.

After booking an initial meeting we can assess your business and:

1. Conduct a payment compliance audit to ensure you are paying your staff correctly.
2. Advise and assist you in rectifying any alleged underpayments claims.
3. Provide general advice about your obligations under the new laws and awards and guidance on how to comply.

Visit our website today for more information or call us on 03 92 792 884 and book an appointment.