Imminent developments in low-wage legal battles
In a significant move to protect workers' rights, the Closing Loopholes Bill has been enacted in Australia, effective from January 1, 2025 [5]. This landmark legislation aims to stamp out wage theft by criminalising intentional underpayments, with penalties including imprisonment for individuals and hefty fines [1][5].
Under the new law, employers found guilty of wage theft could face up to 10 years in prison, while companies could be fined up to three times the value of the underpayment or millions of dollars [1][5]. This federal approach builds on existing laws in Victoria and Queensland, but unlike Queensland's lower threshold, it requires proof of intent for criminal charges [1].
The Bill also increases civil penalties for wage underpayments that do not meet the criminal threshold by at least five times and changes the definition of serious contraventions to include recklessness, not just knowing and systematic breaches [5]. This puts employers under strong pressure to conduct regular wage audits to ensure compliance.
Beyond wage theft, the legislation extends workplace protections to certain independent contractors, including those performing digital platform work or regulated road transport tasks. The Fair Work Commission will now have jurisdiction to set minimum standards and address unfair terminations or deactivations [1].
The Government is providing significant funding to the Fair Work Ombudsman (FWO) to implement their commitment to criminalise wage theft. The FWO, which already has broad-ranging powers prior to prosecution, including the ability to resolve matters through enforceable undertakings and compliance notices, is expected to play a crucial role in enforcing the new legislation [2].
If the FWO does not prosecute, the Federal Court has invited unions to commence class action proceedings under Part IVA of the Federal Court Act [3]. This provides a clearer pathway for employers who self-report to the FWO and take reasonable steps to repay the correct amount.
Employers are urged to seek professional advice and assistance to ensure compliance with the new law. The Employment & Labour team has extensive experience in assisting employers with proactive pay compliance and reviews, addressing employee complaints, and responding to both union proceedings and class actions.
In conclusion, the Closing Loopholes Bill significantly raises the risks and potential costs for employers regarding wage underpayments, imposing both criminal and steep civil penalties, and closes various previous loopholes that allowed underpayment and exploitation in the Australian workforce [1][3][5].
- The Closing Loopholes Bill, aimed at stamping out wage theft, also includes provisions that extend workplace protections to certain independent contractors, particularly those engaged in digital platform work or regulated road transport tasks, implying a broader scope for business regulation.
- The enactment of the Closing Loopholes Bill in Australia will have a significant impact on the business landscape, as employers found guilty of wage theft could face up to 10 years in prison and hefty fines, suggesting increased attention to financial aspects within businesses.
