Navigating Wage Theft Laws in Australia and New Zealand: A Guide

The tap on your shoulder from the Fair Work Ombudsman. The phone call from a distressed employee questioning their pay slip. The sinking realisation that your payroll system might not be interpreting award rates correctly. 

When it comes to wage compliance, 2025 represents a line in the sand for HR managers across Australia and New Zealand.

Intentional underpayment can now land individuals behind bars for up to a decade. The boundary between an honest payroll mistake and criminal conduct has become the most scrutinised line in employment law. Australia's notoriously complex industrial relations system now meets the blunt force of criminal prosecution.

The Fair Work Ombudsman's recovery of $473 million in 2023-24 tells an uncomfortable story. Many underpayments come from sophisticated organisations with dedicated HR teams. From businesses genuinely attempting compliance but drowning in modern award intricacies. From payroll systems that seemed bulletproof until they weren't.

In this guide, we'll examine what wage theft actually means in both jurisdictions, decode the new criminal laws, and give you actionable frameworks to protect your organisation and your people from becoming another cautionary tale. 

Let’s dive right in ⬇️

What Wage Theft Means in 2025 in ANZ

Before we dive into criminal penalties and compliance checklists, let's get clear on what we're actually discussing when using the term "wage theft Australia" or "wage theft New Zealand."

The Australian definition

In Australia, wage theft means failing to pay employees their full entitlements under the Fair Work Act 2009, modern awards, enterprise agreements, or the National Employment Standards. This covers:

• Base wages and salary
• Overtime and penalty rates
• Allowances (tool allowances, uniform allowances, first aid allowances)
• Leave entitlements (annual leave, personal/carer's leave, parental leave)
• Leave loading
• Superannuation contributions (as of 1 January 2024, super became an NES entitlement)
• Redundancy pay
• Notice of termination payments

What makes wage theft Australia distinct from simple payroll errors is the element of intent under the new criminal underpayment Australia laws. 

From 1 January 2025, the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 created a criminal offence specifically targeting intentional underpayment of employee entitlements. The Fair Work Ombudsman can investigate suspected criminal wage theft and refer suitable cases to the Commonwealth Director of Public Prosecutions or the Australian Federal Police for criminal prosecution.

The New Zealand definition

New Zealand's approach came into effect slightly later, on 14 March 2025, through the Crimes (Theft by Employer) Amendment Act. The legislation inserted section 220AA into the Crimes Act 1961, making it theft for an employer to intentionally fail to pay an employee "without reasonable excuse" any money owed under:

• An employment agreement (written or otherwise)
• The Holidays Act 2003
• The Minimum Wage Act 1983
• The Wages Protection Act 1983

The critical phrase here is "without reasonable excuse." This provides a defence for employers who can demonstrate genuine reasons for non-payment — though what constitutes reasonable excuse is still being tested in the courts.

What constitutes wage theft?

Across both jurisdictions, wage theft typically manifests in these forms ⬇️

• Underpayment of minimum wage: Paying below statutory minimums or applicable award rates. This remains the most straightforward form of wage theft.
• Unpaid overtime: Requiring employees to work additional hours without proper compensation at overtime rates specified in awards or agreements.
• Penalty rate violations: Failing to pay weekend rates, public holiday rates, or shift penalties as required.
• Misclassification issues: Classifying employees as independent contractors to avoid entitlements, or placing employees in incorrect award classifications to pay lower rates.
• Superannuation underpayment Australia: Not making required superannuation contributions or miscalculating the superannuation guarantee. Since super became part of the NES in Australia, unpaid or underpaid super now falls squarely within criminal wage theft provisions.
• Holiday pay underpayment: Particularly complex in New Zealand under the notoriously intricate Holidays Act 2003, where many employers struggle with correct calculation methodologies.
• Unlawful deduction from wages Australia: Making deductions from employee pay that don't meet the strict requirements of the Fair Work Act or relevant industrial instruments.
• Off-the-clock work: Requiring or permitting employees to perform work outside recorded hours without compensation.

The Criminal Framework: What Changed in 2025

Both Australia and New Zealand criminalised wage theft in 2025, but the approaches differ significantly in enforcement mechanisms, penalties, and defences available to employers.

Australia's Criminal Underpayment Regime

The intentional underpayment laws Australia provisions took effect on 1 January 2025 following the ministerial declaration of the Voluntary Small Business Wage Compliance Code on 16 December 2024.

Elements of the criminal offence

An employer commits a criminal offence where they:

1. Are required to pay an amount to an employee (such as wages) or on behalf of an employee (such as superannuation) under the Fair Work Act 2009 or an industrial instrument
2. Intentionally engage in conduct that results in failing to pay those amounts on or before the day they're due

The critical word is "intentionally." Accidental or inadvertent underpayments should not be caught by criminal wage theft provisions — though they remain subject to civil penalties.

Criminal penalties

The penalties for wage theft criminal offence Australia are severe:

For individuals: Up to 10 years imprisonment and/or fines of 5,000 penalty units (currently $1,650,000, with penalty units valued at $330 as of November 2024), or three times the amount of the underpayment (whichever is greater)

For companies: Fines of 25,000 penalty units (currently $8,250,000), or three times the amount of the underpayment (whichever is greater)

These maximum penalties dwarf anything previously available in civil enforcement. The message from Parliament is unambiguous: deliberate wage theft will be treated as serious criminal conduct.

Corporate Attribution of Intent

For body corporates, establishing criminal intention uses the Criminal Code Act 1995. A corporate employer may be guilty if:

• A corporate culture existed that directed, encouraged, tolerated, or led to the underpayment conduct
• The company failed to create and maintain a corporate culture requiring compliance with employment obligations

This means HR managers and directors cannot simply claim ignorance. A failure to establish proper payroll compliance systems and a culture of wage compliance can itself constitute criminal conduct.

Safe harbours and defences

Australia provides two key pathways to avoid criminal prosecution:

1. Voluntary Small Business Wage Compliance Code: Small business employers (fewer than 15 employees) who comply with this Code cannot be referred for criminal prosecution by the Fair Work Ombudsman. The Code requires demonstrating honest efforts to pay employees correctly, maintaining proper records, fixing errors promptly, and engaging with the FWO if underpayments are discovered.
   
   
2. Cooperation Agreements: Employers of any size can voluntarily self-disclose potential wage theft to the FWO and seek a cooperation agreement. While such agreements don't prevent civil enforcement action, they stop the FWO from referring conduct to criminal prosecutors.

New Zealand's Crimes Act Amendments

The Crimes (Theft by Employer) Amendment Act created section 220AA of the Crimes Act 1961, which states:

Person A commits theft if they intentionally fail, without reasonable excuse, to pay the money to Person B.

Criminal penalties in New Zealand

The penalties scale with the amount stolen:

For individuals:

• Value stolen under NZD $500: Up to 3 months imprisonment
• Value between NZD $500-$1,000: Up to 1 year imprisonment
• Value exceeding NZD $1,000: Up to 7 years imprisonment
• Fines up to NZD $5,000

For companies: Fines up to NZD $30,000

These penalties are considerably lighter than Australia's regime, reflecting New Zealand's approach of aligning wage theft penalties with general theft provisions.

The "Reasonable excuse" defence

During parliamentary debate, MP Casey Costello successfully inserted "without reasonable excuse" to cover scenarios where non-payment might be intentional but justifiable:

• Payroll system glitches
• Delayed or disputed timesheets
• Cash flow difficulties
• Genuine interpretation disputes over entitlements

However, the parameters of this defence remain untested. Courts will ultimately determine whether employers can rely on complexity of the Holidays Act, resource constraints, or misunderstanding of obligations as reasonable excuses.

Enforcement gaps

Unlike Australia's dedicated Fair Work Ombudsman, New Zealand's wage theft law enforcement falls to the Police Prosecution Service. This creates potential issues:

• Police lack specialist employment law expertise
• Resources may be diverted from other crimes
• Vulnerable workers may be reluctant to approach police
• Complex Holidays Act calculations may overwhelm police investigators

Employment law experts across New Zealand have called for the Labour Inspectorate to take primary investigative responsibility, but the legislation provides no clarity on enforcement agency roles.

Victoria's additional state regime

Victoria introduced its own wage theft legislation in 2020, creating an additional layer of criminal liability. The Wage Theft Act 2020 (Vic) came into force on 1 July 2021 and creates offences for:

• Dishonestly withholding employee entitlements
• Falsifying employee entitlement records
• Failing to keep proper employee entitlement records

Victorian penalties:

For individuals: Up to $218,088 fine and/or 10 years imprisonment

For companies: Up to $1,090,444 fine

The Wage Inspectorate Victoria has investigative powers including entry, search and seizure, and can prosecute offences independently of the Fair Work Ombudsman. This means Victorian employers face potential dual prosecution pathways — though constitutional questions about federal/state law interaction remain partly unresolved.

How to Understand Your Exposure to Wage Theft Penalties

Beyond criminal sanctions, employers face substantial civil penalties for underpayments — even where conduct is accidental.

Enhanced civil penalties in Australia

From 1 January 2025, civil penalties for underpayments by non-small business employers increased significantly:

Maximum civil penalties per contravention:

For companies: The greater of:

• $495,000, or
• Three times the amount of the underpayment

For individuals: The greater of:

• $99,000, or
• Three times the amount of the underpayment

Serious contraventions

Where underpayments constitute "serious contraventions" (knowing or reckless conduct), penalties multiply five-fold:

For companies: The greater of:

• $4,950,000, or
• Three times the underpayment amount

For individuals: The greater of:

• $990,000, or
• Three times the underpayment amount

The threshold for serious contraventions changed on 27 February 2024 from "knowing and systematic" to "knowing or reckless." This means employers who fail to exercise proper diligence face dramatically higher penalty exposure even for non-intentional breaches.

Who Investigates Wage Theft? ANZ Wage Theft Enforcement Bodies

Fair Work Ombudsman (Australia)

The Fair Work Ombudsman investigates wage theft Australia complaints, conducts workplace inspections, and pursues both civil and criminal enforcement. 

FWO enforcement priorities:

• Protection of visa holders and migrant workers
• Fast food, restaurant, and café sector compliance
• Franchising arrangements
• Systematic underpayments in large corporate employers
• Industries with vulnerable workers (cleaning, security, horticulture)

The FWO's Compliance and Enforcement Policy 2025 signals expanding expectations around self-reporting. Previously, the FWO expected employers to report "broad and systemic" underpayments. The updated language removes these qualifiers — suggesting any historical underpayment warrants self-disclosure.

The FWO is also developing a Remediation Guide for 2025 to provide a "best-practice framework for conducting large-scale worker-centred remediation programmes." This will be critical for larger organisations conducting comprehensive payroll reviews.

Labour Inspectorate (New Zealand)

New Zealand's Labour Inspectorate investigates breaches of employment standards, though its role in criminal wage theft enforcement remains ambiguous. The Inspectorate can:

• Conduct workplace investigations
• Issue improvement notices
• Refer matters to the Employment Relations Authority
• Potentially refer criminal matters to police (though this pathway is unclear)

The lack of clarity around who investigates wage theft New Zealand creates enforcement uncertainty. Police hold primary criminal prosecution responsibility but lack employment law specialisation. Many experts advocate for the Labour Inspectorate to lead investigations, referring only prosecutable matters to police — mirroring Australia's Fair Work Ombudsman model.

Wage Inspectorate Victoria

For Victorian employers, the Wage Inspectorate Victoria operates independently, with powers to:

• Enter premises and conduct searches
• Seize evidence
• Require document production
• Compel testimony under oath
• Issue infringement notices
• Prosecute wage theft offences

The Inspectorate works alongside the FWO, though coordination between state and federal enforcement can create compliance complexity for employers.

Wage Theft Compliance: How to Build Your Defence

How do HR teams prevent wage theft and demonstrate due diligence under the new criminal regime? Here's a practical compliance framework. ⬇️

1. Conduct comprehensive payroll audits

Regular payroll audits remain your strongest defence against both accidental underpayments and allegations of intentional wage theft.

Payroll audit checklist Australia and New Zealand:

Award and Agreement Review

• Identify which modern awards or enterprise agreements cover each employee classification
• Verify correct award classification for each role (don't rely on job titles alone)
• Map position duties against award classification descriptions
• Check for award updates from Fair Work Commission or industry changes
• Review enterprise agreement terms against award better off overall test (BOOT)

Base Rate Verification

• Compare actual base rates paid against minimum award rates
• Account for pay increases from Fair Work annual wage review
• Verify salary employees aren't disadvantaged compared to award entitlements
• Check part-time and casual employees are receiving correct base rates

Allowances Assessment

• Identify all allowances applicable to each role under relevant awards
• Verify tool allowances, uniform allowances, first aid allowances
• Check meal allowances, vehicle allowances, and other expense allowances
• Ensure allowances are correctly calculated and paid

Overtime and Penalty Rates

• Verify overtime calculations align with award multipliers
• Check weekend penalty rates are correctly applied
• Review public holiday rates (noting differences between jurisdictions)
• Assess shift penalties and night-time loadings
• Confirm casual loading calculations (25% in most Australian awards)

Leave Entitlements

• Audit annual leave accruals and payment upon termination
• Review personal/carer's leave calculations
• Check long service leave accruals (noting state-specific variations in Australia)
• Verify parental leave entitlements
• Calculate leave loading correctly (17.5% in many Australian awards)
• Review Holidays Act compliance for New Zealand employers (this is notoriously complex)

Superannuation Compliance (Australia)

• Verify superannuation guarantee rate (11.5% from 1 July 2024 to 30 June 2025, increasing to 12% from 1 July 2025)
• Check ordinary time earnings (OTE) calculations capture all relevant payments
• Ensure quarterly payment deadlines are met
• Confirm superannuation contributions for contractors where applicable

Annualised Salary Arrangements (Australia)

• Verify annual salaries exceed all award entitlements
• Check annualised salary agreements include required clauses
• Conduct six-monthly reconciliations as mandated
• Document methodology for calculating annualised salaries

Record-Keeping Compliance

• Verify time and attendance records are accurate and complete
• Check employment records include all required information under Fair Work Act
• Ensure records are readily accessible and in English
• Confirm retention for minimum seven years
• Review payslip compliance (must include all required particulars)

High-Risk Areas

• Review classification of employees vs contractors
• Assess fixed-term contract compliance
• Check junior rate calculations align with age-based percentages
• Verify apprentice and trainee rates
• Review piece rate arrangements against minimum standards

2. Implement robust payroll systems and controls

Technology alone won't prevent wage theft — but inadequate systems significantly increase risk.

System requirements:

1. Award interpretation capability: Your payroll software must accurately interpret modern award rules. Many underpayments stem from software failing to calculate complex penalty rate interactions, allowances, or overtime multipliers correctly.
2. Automated compliance checking: Implement systems that flag potential underpayments, missed allowances, or calculation errors before pay runs finalise.
3. Audit trails: Maintain comprehensive records of all payroll decisions, changes to employee classifications, rate adjustments, and exception handling.
4. Regular system updates: Ensure your payroll provider updates rates, allowances, and award provisions following Fair Work Commission determinations and annual wage reviews.
5. Exception reporting: Generate regular reports showing employees approaching or exceeding maximum weekly hours, unpaid overtime, missed breaks, and other high-risk indicators.

3. Establish clear governance and accountability

Criminal wage theft laws create personal liability for directors, officers, and senior managers. Governance structures must reflect this reality.

Board and Executive Oversight:

• Include payroll compliance as a standing board agenda item
• Require regular executive reporting on wage compliance audits
• Establish clear accountability for compliance within the C-suite
• Consider appointing a senior executive as "compliance champion"
• Ensure directors understand their personal exposure under wage theft criminal offence provisions

Policies and Procedures:

• Develop comprehensive payroll policies documenting all calculation methodologies
• Create approval workflows for pay classifications and rate changes
• Establish procedures for investigating employee pay queries
• Document remediation processes for identified underpayments
• Implement whistleblower protections for employees reporting pay concerns

Training and Competency:

• Provide award interpretation training for payroll staff
• Educate managers on correct time recording and approval procedures
• Train HR teams on classification assessments and contractor vs employee tests
• Ensure senior management understand wage theft penalties and their obligations
• Conduct regular refresher training as laws and awards change

4. Build a self-reporting culture

Under the new regime, self-reporting underpayments to the Fair Work Ombudsman can mean the difference between civil remediation and criminal prosecution.

When to Self-Report:

The FWO's updated enforcement policy suggests self-reporting any identified historical underpayments regardless of scale. Key triggers include:

• Discovery of systematic underpayments affecting multiple employees
• Identification of structural issues in payroll systems or award interpretation
• Findings from internal or external payroll audits revealing breaches
• Employee complaints that reveal broader compliance issues
• Changes in award interpretations that reveal past underpayments

Cooperation Agreements:

For employers who self-disclose potential criminal wage theft, cooperation agreements with the FWO provide protection from criminal referral. The FWO considers:

• Whether the employer identified and disclosed the conduct voluntarily
• Timeliness of the disclosure
• Whether the employer committed to repaying underpayments with interest
• Whether the employer meaningfully engaged with affected employees
• Steps taken to prevent recurrence

While cooperation agreements don't prevent civil penalties, they remove the spectre of criminal prosecution and demonstrate good faith.

5. Prepare for payday Superannuation (Australia)

From 1 July 2026, Australia implements Payday Super — requiring superannuation contributions to be paid at the same time as wages rather than quarterly. This represents the biggest change to payroll compliance since the introduction of Single Touch Payroll.

Preparation steps:

• Upgrade payroll systems to handle pay cycle frequency super calculations
• Establish workflows for super payment processing aligned with pay runs
• Test clearing house integration with new payment frequency
• Review cash flow impacts of monthly vs quarterly super payments
• Train payroll teams on new calculation and payment requirements

Failure to comply with Payday Super will fall within wage theft provisions, creating potential criminal exposure for non-payment.

Template: Wage Theft Exposure Assessment

Use this template to assess your organisation's current wage theft exposure and identify priority areas for remediation.

Risk Assessment Framework

For each element, rate your organisation's current state:

• Green: Full compliance with documented evidence
• Amber: Partial compliance or compliance uncertain
• Red: Non-compliance identified or high risk of non-compliance

Red-rated items require immediate attention. Amber items should be scheduled for review within 30 days. Green items should be validated through periodic audits.

Template: Wage Remediation Communication

When underpayments are discovered, transparent communication with affected employees is critical. Here's a template for initial notification.

SUBJECT: Important Information About Your Employment Entitlements

Dear [Employee Name],

We are writing to inform you about a recent review of our payroll processes that has identified an issue affecting the calculation of your [wages/entitlements].

What we discovered: [Brief, factual description of the underpayment issue, e.g., "Our review identified that overtime rates for [timeframe] were calculated at an incorrect multiplier, resulting in underpayment of overtime entitlements."]

How this affects you: Based on our analysis, we calculate that you were underpaid approximately $[amount] for the period [start date] to [end date].

What we're doing about it:

1. We have calculated the full amount you are owed, including:
   
   
   • Underpaid wages/entitlements: $[amount]
   • Interest on underpaid amounts: $[amount]
   • Superannuation on underpaid amounts (where applicable): $[amount]
2. We will pay you the full amount of $[total] in your pay on [date].
   
   
3. We have corrected our payroll systems to prevent this issue from recurring.
   
   
4. We have engaged [external auditor/payroll specialist] to conduct a comprehensive review of our payroll processes.
   
   

Your next steps: We will provide you with a detailed calculation breakdown showing how we determined the underpayment amount. You are entitled to review this calculation and raise any questions or concerns.

If you would like to discuss this matter further, please contact [name, title] at [email/phone] or attend [details of information session if applicable].

We sincerely apologise for this error and any concern or inconvenience it has caused. Paying our employees correctly is a fundamental obligation, and we are taking comprehensive steps to ensure our systems and processes meet the high standards you deserve.

Yours sincerely,

[Name, Title]

Note: This template should be reviewed by legal counsel before use, particularly for large-scale remediation programs. Consider offering affected employees access to independent advice and clearly outline their rights to challenge calculations.

Template: Payroll Compliance Checklist for HR Managers

Monthly Payroll Compliance Review

Conduct this review at the end of each pay period to identify issues before they become systemic.

□ Rate Verification

• Base rates for all employees match current award/agreement minimums
• Recent Fair Work Commission decisions have been implemented
• Annualised salaries exceed all component entitlements
• Junior rates correctly calculated based on current ages

□ Time and Attendance

• All worked hours captured in timesheets
• Overtime hours correctly identified and approved
• Break times properly recorded and unpaid
• Weekend/public holiday shifts flagged for penalty rates

□ Allowances

• Industry-specific allowances paid where applicable
• First aid/health and safety allowances for qualified employees
• Tool/equipment allowances for trades
• Meal/travel allowances for applicable roles

□ Deductions

• All deductions authorised by employee in writing
• Deductions benefit employee or required by law
• No unlawful deductions for training, equipment, or uniforms

□ Superannuation (Australia)

• All eligible employees have nominated super fund
• Contributions calculated on ordinary time earnings (OTE)
• Payment scheduled within quarterly deadline
• Superannuation guarantee rate is current (11.5% as of 1 July 2024)

□ Leave Management

• Annual leave accruals align with award requirements
• Personal leave calculations correct for employment type
• Long service leave tracked accurately (note state variations)
• Leave loading calculated correctly (where applicable)

□ Record-Keeping

• Employment records include all Fair Work Act required particulars
• Time and attendance records maintained for 7 years
• Payslips include all required information
• Records readily accessible in English

□ High-Risk Scenarios

• No unpaid trial shifts or working interviews
• No sham contracting arrangements
• Fixed-term contracts comply with new requirements
• Independent contractor arrangements meet genuine contractor tests

□ System Checks

• Exception reports reviewed (overtime limits, missing timesheets, calculation anomalies)
• Recent system updates tested for accuracy
• Award interpretation rules validated
• Audit trails complete and accessible

□ Query Management

• Employee pay queries logged and investigated
• Response time meets internal SLAs
• Root cause analysis conducted for systemic issues
• Remediation processes initiated where required

Quarterly Review

□ Comprehensive Audit

• External payroll audit conducted or scheduled
• Award compliance verified across all classifications
• Superannuation reconciliation completed
• Board reporting prepared

□ Training and Education

• Payroll staff competency assessments current
• Manager training on time approval completed
• Award changes communicated to relevant staff

□ Governance

• Wage compliance included in board reporting
• Internal audit plan reviewed and updated
• Policy and procedure updates implemented

Annual Review

□ Strategic Assessment

• Full payroll system capability review
• Wage theft exposure assessment completed
• Compliance culture survey conducted
• Budget for audit and remediation activities allocated

Issues Identified: [Document any compliance gaps and required actions]

Completed by: _________________ Date: ___________

Reviewed by: _________________ Date: ___________

What to Do If an Employee Reports Underpayment?

How you respond when an employee raises a pay concern can determine whether the matter resolves quickly or escalates to Fair Work investigation.

Immediate response (within 24 hours):

1. Acknowledge receipt: Thank the employee for raising the concern. Explain you take pay queries seriously and will investigate promptly.
   
   
2. Gather information: Collect details about the suspected underpayment including:
   
   
   • Specific pay periods affected
   • Nature of the concern (missed overtime, incorrect rate, missing allowances)
   • Employee's calculation of amounts owed
   • Supporting documentation (timesheets, rosters, award provisions)
3. Preserve records: Ensure all relevant payroll records, timesheets, and system data are preserved.
   
   
4. Assign responsibility: Designate a senior HR or payroll staff member to conduct the investigation.
   
   

Investigation phase (within 7-14 days):

1. Conduct thorough review:
   
   
   • Pull complete payroll records for affected periods
   • Review applicable award or agreement provisions
   • Calculate correct entitlements using proper methodology
   • Identify whether issue is isolated or affects other employees
   • Determine root cause (system error, incorrect classification, misinterpretation of award)
2. Document findings: Create detailed investigation record including:
   
   
   • Methodology for calculating underpayment
   • Total amount owed (principal, interest, super if applicable)
   • Number of employees affected
   • Period of underpayment
   • Root cause analysis
   • Remediation steps required
3. Seek specialist advice: For complex matters, engage industrial relations lawyers or payroll specialists to verify calculations and assess legal exposure.
   
   

Resolution phase (within 30 days):

1. Communicate outcome: Provide employee with:
   
   
   • Clear explanation of investigation findings
   • Detailed calculation breakdown showing amounts owed
   • Timeline for repayment
   • Steps being taken to prevent recurrence
   • Contact for queries
2. Process payment: Pay underpayment amounts promptly with interest. For Australian employers, interest should align with FWO expectations (currently Reserve Bank cash rate plus 6%).
   
   
3. Systemic remediation: If the issue affects multiple employees:
   
   
   • Identify all impacted staff
   • Calculate individual remediation amounts
   • Develop communication plan
   • Consider self-disclosure to Fair Work Ombudsman
   • Implement system corrections
4. Root cause correction: Fix the underlying issue in payroll systems, classification frameworks, or operational processes.
   
   

When to self-report to Fair Work Ombudsman:

Consider voluntary disclosure when:

• Underpayments are systemic and affect many employees
• The issue spans multiple years
• Amounts are substantial
• The matter could constitute intentional wage theft
• Employees have threatened external complaints
• Internal investigation reveals serious compliance failures

Voluntary disclosure through cooperation agreements can prevent criminal referral while demonstrating good faith.

Final thoughts

The criminalisation of wage theft marks a watershed moment in employment law. For HR managers, survival requires combining technical payroll expertise with governance, culture change, and proactive risk management.

The fundamentals? They haven't budged. Pay people correctly and on time according to their legal entitlements. What's transformed is the price of failure.

Priority actions:

1. Conduct comprehensive payroll audits immediately — particularly if your last review predates 12 months, or followed award changes, system updates, or workforce restructures.
   
   
2. Verify your payroll systems actually work — especially for overtime interactions, penalty rates, and allowances. Never assume your software is correct.
   
   
3. Establish board-level oversight — with regular executive reporting and clear accountability for preventing underpayments.
   
   
4. Train your entire leadership team — on wage theft penalties, personal liability risks, and their obligations to maintain compliant systems.
   
   
5. Build self-reporting protocols — so you can respond swiftly when issues emerge, potentially avoiding criminal prosecution through cooperation.
   
   
6. Fix identified issues immediately — and remediate affected employees promptly with full back-pay, interest, and super where applicable.
   
   
7. Document everything — from award interpretation decisions to remediation methodologies to training records. Documentation proves due diligence.
   
   
8. Stay informed — subscribe to Fair Work Commission updates, join industry groups, and engage specialists for complex matters.
   
   

What separates organisations facing criminal prosecution from those resolving underpayments through civil remediation isn't the absence of mistakes. It's how they respond. 

• Did you establish systems designed to prevent underpayments? 
• Did you conduct regular audits? 
• Did you fix issues promptly when discovered? 
• Did you self-disclose systemic problems? 
• Did you demonstrate genuine commitment to paying employees correctly?

These questions determine whether your organisation demonstrates due diligence or intentional disregard. And in 2025, that distinction matters more than ever — but it's entirely within your control. 🙌

Explore Subscribe-HR’s ANZ HR resources

Stay ahead of Australian and New Zealand employment law changes with our specialised HR resources. 

From wage theft prevention guides to Fair Work compliance checklists, our resource library is built specifically for ANZ HR professionals navigating complex award interpretations, payroll accuracy requirements, and modern award updates.