Australian bosses could go to jail for 10 years and be fined $1.65 million if they “deliberately” underpay their workers, as part of new laws that nationally criminalise wage theft from January 1. 

The new laws and penalties follow years of underpayment scandals in Australia, with cases at prominent employers including Woolworths, Chatime, Qantas, NAB, BHP, 7-Eleven and the ABC.

Until now, the federal body that investigates wage theft has only been able to go after companies and their directors using civil laws, which don’t come with the threat of jail time.

Now Fair Work will be able to go after them using criminal laws too. 

But it will have to prove that the employer intentionally avoided paying a worker appropriate wages and penalties, superannuation or other entitlements.

How far do the new criminal laws go?

Companies and individuals can only be prosecuted for alleged offending that occurs after this date, and charges can only be laid by federal prosecution entities after a referral by Fair Work.

Any individual found guilty could face up to 10 years in prison and a fine of $1.65 million, while liable companies could be fined up to $8.25 million.

Employment lawyer Daniel Victory said the bar to prosecute individuals under the new laws would be high, because Fair Work has never had to prove intent under its existing civil powers.

“These [new] laws are really intended to break the business models of businesses that deliberately underpay workers,” the principal lawyer at Maurice Blackburn said.

For this reason, Mr Victory thinks Fair Work will only go after particularly “egregious” or high-profile examples of intentional wage theft with its new powers.

“The truth of the matter is the government isn’t going to, and probably couldn’t afford to, enforce every single intentional underpayment that occurs,” he said.

Mr Victory says companies that engage in “wage cashback” could be in Fair Work’s sights.

Wage cashback schemes typically impact vulnerable migrant workers who are desperate to secure a visa.

It involves them being forced to withdraw money they’ve been formally paid and hand back the cash to bosses.

These allegations came to light during the 7-Eleven scandal that brought wage theft into the national spotlight.

Fair Work is also giving cover to employers who self-report possible wage theft.

“An employer who self-reports conduct that could be a criminal underpayment offence can request to enter a cooperation agreement with us,” the statement from Fair Work said.

New laws slammed as ‘overreach’

While the new laws will only target intentional wage theft, one business lobby group has slammed them as an extra burden on business owners that want to do the right thing.

“We feel these new laws are an overreach,” the Australian Chamber of Commerce and Industry’s chief of policy and advocacy, David Alexander, said in a statement. 

Mr Alexander said the Fair Work Act, which governs the responsibilities of employers, had sprawled in size to 500 pages. Even the new criminal laws come with a guide, due to a range of legal variances.

“We will be interested to see how many prosecutions will be made under these changes as employers want to do the right thing but are hampered with complex regulations,” Mr Alexander added.

The first successful prosecution could take years, Maurice Blackburn’s Daniel Victory said.

“It’s a case of wait and see,” he said.

“In order for this to be a proper deterrent, employers will need to be shown a message that the regulator is prepared to take this action.”

In 2024, using its existing civil powers, Fair Work secured the highest fines in its prosecution history.

The top figure was against Sushi Bay, with a record $15.3 million handed down after the take-away chain ripped off 163 workers between 2016 and 2020.

Most of the staff were Korean nationals working on student working holiday and 457 skilled visas. 

Meanwhile, children’s retailer Blue Sky Kids Land and two of its directors were recently hit with a fine of $5.1 million, after wage theft against four Chinese migrants that the Federal Court also found was “deliberate”.

In that case, Fair Work said workers had been paid as little as $10 an hour.

The financial impact had been so severe, that one staff member and her husband struggled to pay their mortgage, and put off having children.