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What Business Owners need to know about Wage Theft Laws

New Wage Theft Laws: Criminalisation of Wage Theft

On 1 January 2025, new laws came into effect which criminalises intentional wage underpayments. It is now more critical than ever for businesses to ensure compliance!

Here’s a practical breakdown to help you navigate these changes.

What’s New?

Wage theft has always been illegal, and those caught have always faced hefty fines. However, the government has now introduced more stringent penalties, such as even heftier fines, and for those extremely serious cases, criminal sanctions now apply, such as imprisonment.

What the Law Covers

The new legislation, part of the Closing Loopholes amendments and the Fair Work Act 2009, makes intentional underpayment of wages or entitlements a criminal offense.

This targets employers who knowingly underpay employees, for example:

  • underpaying for hours worked,
  • not compensating for overtime, and
  • withholding entitlements

Penalties for Non-Compliance

The consequences of intentional wage theft include:

  • Corporations: Fines up to $7.825 million or three times the underpayment amount
  • Individuals (Directors/Managers): Fines up to $1.565 million or three times the underpayment amount
  • Severe cases: Up to 10 years imprisonment.

Small Businesses

It is important to note that small businesses (those with fewer than 15 employees) are currently excluded from criminal penalties. However, all businesses should address errors promptly to avoid escalating risks.

Intentional versus Unintentional (‘Honest Mistakes’)

These new laws are targeted at those employers who are caught underpaying their staff in an intentional or deliberate manner. Honest mistakes (such as an accidental payroll error, or misinterpretation of an award entitlement) are exempt from the offence and there will be a clear distinction between genuine errors and intentional wage theft. 

However, businesses should be aware that even unintentional underpayments can lead to increased civil penalties if they remain uncorrected. Repeated mistakes could be interpreted as negligence, resulting in:

  • civil penalties of up to $469,500
  • for serious breaches, Employers may face fines which can escalate to almost $4.7 million, and
  • applicants can now seek a remedy which is three times the amount of the underpayment.

What should Businesses do to address this?

Our team at Allan Hall HR has a wealth of experience in payroll legislation, employment contracts and payroll audits. We can help you to:

  1. Understand Legal Obligations: Business owners should familiarise themselves with relevant employment laws, including minimum wage requirements, overtime pay regulations, and entitlements under fair work instruments such as awards or agreements.
  2. Conduct regular Payroll Audits and Reviews: Conduct regular internal or third-party payroll audits of payroll records and employee contracts to ensure accuracy in wage payments. This can help identify any discrepancies or potential areas of non-compliance. 
  3. Act Quickly on Discrepancies: Resolve underpayment issues immediately to avoid escalations.
  4. Invest in Proper Training: Ensure that staff responsible for payroll and human resources are adequately trained on wage laws and regulations. Provide ongoing education to keep them informed about any updates or changes in legislation.
  5. Implement Clear Policies and Procedures: Establish clear policies and procedures for wage calculation, including overtime, leave entitlements, and superannuation contributions. Make sure employees are aware of their rights and how to report any concerns regarding wage payment.
  6. Keep Detailed Records: Maintain accurate and detailed records of employee hours worked, wages paid, and any additional entitlements. This documentation can serve as evidence of compliance in the event of an audit or investigation.
  7. Promote Transparency and Communication: Foster a culture of transparency and open communication within the organisation. Encourage employees to raise concerns or questions about their wages without fear of retaliation.

Businesses can avoid costly fines and reputational damage by prioritising compliance. Investing in robust payroll processes, training and regular payroll audits is not just about meeting legal obligations, it is also about fostering a culture of accountability and trust in your business.

If you have concerns about paying your workers less than they’re legally entitled to, then contact our team of experienced HR consultants today! We have a wealth of experience in this area and can assist.

Need Assistance?

At Allan Hall HR, we have a team of experienced HR consultants. To learn more about our services, please click here. Alternatively, please feel free to call us on 1300 916 764 or contact us here to discuss any questions you may have with us in regard to wage compliance.

HR Support Centre Demo

We invite all our clients to explore our complimentary HR Support Centre, designed to help you navigate your employee obligations and stay updated on legislative changes. This valuable resource offers ready-to-use HR templates, best practice guidance, checklists, and access to a vast library of articles on compliance and employee management. Book in a free demo today.

CONTACT ALLAN HALL HUMAN RESOURCES

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Supporting your employees’ mental health

Do you know your obligations?

Changes to Work Health and Safety legislation and new Respect at Work legislation in Australia have significantly increased employer responsibilities regarding workplace sexual harassment and discrimination.

Legislation now requires employers in all businesses to shift from a reactive response to take proactive steps to prevent harm to their employee’s mental health, including actively preventing sexual harassment, discrimination, bullying and other psychosocial hazards.

However, recent data highlights that many employers still fall short of meeting their obligations:

Safe Work Australia’s Key Work Health and Safety Statistics for 2024 show that:

  • mental health conditions now account for 11% of all serious workers’ compensation claims. 
  • time lost from work in these cases is more than 5 times higher than other injuries and diseases. 

A survey by Our Watch reveals some alarming gaps in workplace awareness:

  • 40% of workplace leaders are unaware of their legal obligations.
  • Only 76% realise what is classified as sexual harassment, indicating a need for better education and action.

Data from the Workplace Gender Equality Agency (WGEA) also indicates that while 99% of employers have formal policies, 28% are not monitoring incidents of sexual harassment.

The SpeakingOut@Work report, commissioned by Australia’s National Research Organisation for Women’s Safety (ANROWS), has found:

  • 77% of LGBTQ young people surveyed reported experiencing workplace sexual harassment, often directly tied to their LGBTQ identities.
  • 70% of LGBTQ young people experienced behaviours they felt were inappropriate, unwelcome, and targeted based on their sex, gender, or sexuality, but were unsure if these constituted sexual harassment under the law.

The above statistics highlight that, although the work health and safety legislation and Respect@Work reforms have been in place for some time and apply to all businesses, more action needs to be taken by employers.  

Why take action?

To ensure your organisation does not become part of the statistics reflecting poor workplace culture and to avoid potential claims, it is critical to assess your risk and take appropriate action.

Legal Ramifications of Non-Compliance

Should your organisation be in breach of workplace health and safety laws, significant penalties may apply. Breaches of anti-discrimination and workplace harassment laws can result in claims, substantial fines, legal fees, and damage to your organisation’s reputation.

Employees who experience harassment or discrimination could lodge workplace complaints, leading to investigations and potential legal action. In some cases, unresolved or mishandled complaints may escalate to tribunal or court proceedings, where damages awarded to employees and associated legal costs can be substantial.

In addition, a failure to address these issues can harm your brand, reduce employee morale, and increase turnover, further impacting your organisation’s bottom line.

The Importance of Respect in the Workplace

Creating a safe and respectful workplace is not just about avoiding legal or financial ramifications—it’s about fostering a positive culture where employees feel valued, safe, and empowered. Organisations which have taken proactive measures to prevent discrimination and harassment and to build a supportive workplace are more likely to attract and retain top talent, build better team collaboration, and boost overall performance.

By addressing any gaps and prioritising inclusivity, employers can meet their legal obligations while fostering a workplace culture of respect, safety, and equality.

Practical Steps for Small Businesses to comply with the new Work Health and Safety and Respect@Work Legislation

If you have not yet taken essential steps, such as updating your policies and providing training to your staff following the changes, your employees and business may be at risk. To learn more about the steps your business can take to comply with the new work health and safety and Respect@Work legislation please read our previous article by clicking here.

Need assistance?

At Allan Hall HR, we have a team of experienced HR consultants who can support your business with meeting its compliance obligations and assist to create a positive workplace culture. To learn more about our services, please click here. Alternatively, please feel free to call us on 1300 916 764 or contact us here to discuss any questions you may have.

HR Support Centre Demo

We invite all our clients to explore our complimentary HR Support Centre, designed to help you navigate your employee obligations and stay updated on legislative changes. This valuable resource offers ready-to-use HR templates, best practice guidance, checklists, and access to a vast library of articles on compliance and employee management. Book in a free demo today.

CONTACT ALLAN HALL HUMAN RESOURCES

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Reform Urged to Extend Super to All Workers Under 18

A Super Start

Empowering Australia’s Young Workforce

Australia’s under-18 workforce could benefit from an additional $10,000 in retirement savings if outdated rules excluding them from superannuation contributions are abolished, according to a new report by the Super Members Council (SMC).  

Currently, under-18 workers must clock more than 30 hours a week to qualify for compulsory super contributions. This complex and discriminatory rule denies approximately 505,000 teenage workers $368 million annually, an average of $730 each.  

The report highlights that: 

  • A typical teenager working two years could accumulate $2,200 in super contributions, setting them on a path to long-term financial security 
  • By retirement, these savings would grow to an additional $10,000, leveraging the power of compound interest 
  • The report calls for removing the 30-hour threshold, a move that simplifies employer administration while promoting equity. 

SMC CEO Misha Schubert emphasised the importance of this reform:   

“Every Australian worker deserves the opportunity to build a dignified retirement, starting with their first job. Extending super to under-18s ensures their savings grow from day one, simplifying compliance for businesses and delivering a fairer system.”   

The report recommends a phased implementation to ease the transition for businesses, citing similar adjustments for other worker categories in 2022.   

This initiative aligns with strong public support, as 85% of Australians believe all paid workers deserve super contributions. The SMC hopes to collaborate with employer groups to achieve this reform, ensuring Australia’s youth can fully benefit from the nation’s superannuation system.   

CONTACT ALLAN HALL SUPERANNUATION

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$3 Million Super Tax in Limbo

Senate Delays Raise Doubts Over Timing and Impact

The Better Targeted Super Concessions Bill which includes the $3 million superannuation tax, faces further uncertainty as it has not been scheduled for debate in the Senate this month. 

The Australian government’s proposal to impose an additional 15% tax on superannuation balances exceeding $3 million is progressing through the legislative process.

The draft legislation, introduced to Parliament on 30 November 2023, was referred to the Senate Economics Legislation Committee, which tabled its report on 10 May 2024. The report recommended the bill be passed without changes.

The proposed tax, scheduled to take effect on 1 July 2025, aims to apply a 30% concessional tax rate to future earnings for superannuation balances above $3 million.

Implications for Super Fund Members

The delay raises doubts about whether the bill will be passed before the end of the parliamentary sitting year. The Senate’s draft schedule, released last Friday, does not include the bill for debate.

This change is expected to impact approximately 80,000 individuals, or 0.5% of superannuation account holders. Without Senate approval this year, there are concerns about insufficient time for affected super fund members to restructure their arrangements. 

Members with superannuation balances nearing or exceeding $3 million are encouraged to stay informed and consult financial advisors about potential impacts on their retirement planning.

CONTACT ALLAN HALL SUPERANNUATION

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Superannuation Boost for Paid Parental Leave

A Step Toward Gender Equity in Retirement Savings 

The Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024 marks a pivotal step in addressing the gender gap in retirement savings.  

Economists, industry advocates and employers have welcomed this reform, praising it as a long-overdue measure to improve women’s financial security and help close the gender gap in retirement savings.

By ensuring that Paid Parental Leave includes super contributions, the Bill acknowledges the reality that caregiving responsibilities should not come at the cost of a secure retirement. 

Employers please note: 

  • The new Bill takes effect from 1 July 2025 
  • Amendment provides eligible parents with an additional 12% of their Paid Parental Leave as a super contribution 
  • This contribution will be in line with the SG rate and will increase over time with any future adjustments to the legislated rate. 

Introduced as part of the Government’s broader reforms, this Bill extends superannuation contributions to Paid Parental Leave, providing financial support for families and working parents, particularly women. 

The new Bill, which takes effect on 1 July 2025, directly addresses this gap by providing eligible parents with an additional 12% of their Paid Parental Leave as a super contribution. This contribution will be in line with the Superannuation Guarantee (SG) rate and will increase over time with any future adjustments to the legislated rate. For many families, this change could amount to a super contribution of up to $3,150, a significant boost that will grow as the Paid Parental Leave scheme reaches 26 weeks by 2026. 

This amendment builds on previous government efforts to strengthen the superannuation system, ensuring that more Australians, particularly women, can look forward to a dignified retirement. Alongside reforms to improve the flexibility, duration and income thresholds for Paid Parental Leave, this change underscores the importance of supporting working families both at the time of birth and in the long term. 

As this Bill takes effect, it represents a significant investment in the future of working women, ensuring that their contributions—both in the workplace and at home—are recognised and valued, setting a new standard for financial equity in Australia. 

CONTACT ALLAN HALL BUSINESS ADVISORS

Background

For decades, women — who make up the majority of primary caregivers — have faced financial setbacks after becoming parents. Research shows that, on average, women experience a 55% reduction in earnings during the first five years of parenthood, a loss that compounds over time. This drop in income, coupled with the compounding effects of superannuation contributions based on lower wages, has left women retiring with around 25% less super than men.

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Closing Loopholes Changes

There are new workplace laws that are coming into effect from 26 August 2024, as part of the Closing Loopholes changes.

These changes are important to review if you engage workers under employee or independent contractor arrangements.

We have listed the upcoming changes below and have linked additional articles providing further information.

  1. New definitions of employment – The Fair Work Act will define ’employee’ and ’employer’ based on the true nature and practical reality of the working relationship. This may result in some independent contractor working arrangements being characterised differently. Learn more »
  2. Changes to casual employment – The Fair Work Act will redefine ‘casual employee,’ introduce a new pathway for casuals to become permanent, and increase frequency to provide the Casual Employment Information Statement. Learn more »
  3. Right to disconnect – Eligible employees will have the right to disconnect outside work hours, including refusing to respond to employer or third-party contact, with rules to determine whether such refusal is unreasonable. Note, these changes will not apply to small business employers until 26 August 2025. Learn more »
  4. New minimum standards for gig economy workers and the road transport industry – New minimum standards and protections for gig economy and road transport industry workers, called ‘regulated workers,’ will commence. The Fair Work Commission will be able to set minimum standards orders or guidelines regarding terms such as payments, deductions and insurance. The changes also expand access to collective agreements for regulated workers and provide the Commission with power to deal with dispute resolution for unfair terminations or deactivations.
  5. Additional workplace delegates’ rights – The Fair Work Act will expand rights and protections for workplace delegates. Workplace delegates will include regulated workers, such as employee-like workers and regulated road transport contractors.

There will be further changes to laws affecting Australian workplaces as a result of the Closing Loopholes Acts, and we will post articles to keep you up to date as these changes approach.

Need assistance?

At Allan Hall HR, we have a team of experienced HR consultants. Please call us on 1300 916 764 or contact us here to discuss any questions you may have with us in regard to the upcoming Fair Work Act changes and what your business will need to do to prepare for these. To learn more about our services, please click here.

CONTACT ALLAN HALL HUMAN RESOURCE

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Independent Contractor Changes

Effective 26 August 2024, changes to the definition of employment and contractor rights may result in some working relationships being characterised differently and the removal of unfair contract terms.

Definition of Employment and Worker Engagement

As a result of the Closing Loopholes legislation, on 26 August 2024 there will be a new definition of employee and employer under the Fair Work Act.

From 26 August 2024, determining if a worker is an employee or independent contractor will be based on the actual nature of the relationship between the parties. Accordingly, a multi-factor test will be used to determine the true working relationship. Factors in the test will include (and can vary from case to case):

  • the extent of control of, or the right to control, the worker
  • whether the worker is provided with tools and equipment
  • whether uniforms were provided and/or required by the principal
  • whether the worker is permitted to delegate or subcontract work
  • the remuneration structure – specifically, whether the worker receives payment of a periodic wage or salary or compensation by reference to the completion of a task or project
  • whether the worker is entitled to paid annual leave or sick leave; and
  • the express terms of the contract between the parties.

Unfair Terms in Contracts

Contractors can now approach the Fair Work Commission if they believe their contract includes unfair terms. The Fair Work Commission can:

  • Determine if a contract term is unfair, considering various factors
  • Set aside, amend, or vary the contract if it contains unfair terms.

Contractors earning above a yet to be determined ‘high-income threshold’ will not be able to seek an unfair contract remedy with the Commission however they can seek a court review. 

Sham Contracting

Sham contracting, where an employer falsely represents an employee relationship as an independent contractor arrangement, is prohibited under the Fair Work Act. Employers must review and correct any existing arrangements to ensure compliance.

What should employers do?

  1. Review Worker Classifications: Employers should review current working relationships to ensure they align with the updated criteria. The multi-factor test, as described above, should be used to accurately classify workers as employees or contractors.
  2. Assess and Review Contracts: Ensure current contracts accurately reflect the true nature of the working relationship. Make adjustments if there’s a mismatch between contract terms and practical reality.
  3. Avoid Sham Contracting: Ensure all employment arrangements are correctly classified and transparent. Misrepresenting an employee as an independent contractor is prohibited, so reviewing existing arrangements and updating them if they have been misrepresented, is crucial to comply with the new legislation.

Need assistance?

At Allan Hall HR, we have a team of experienced HR consultants. Please call us on 1300 916 764 or contact us here to discuss any questions you may have in regard to independent contractor changes, including reviewing contracts and the arrangements in place for independent contractors. To learn more about our services, please click here.

CONTACT ALLAN HALL HUMAN RESOURCE

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Steps to Prepare for New Fixed Term Contract Rules

From 6 December 2023 there have been substantial changes in the usage of fixed term contracts.

What are the New Rules?

There are new rules for fixed term contracts that are designed to regulate employment duration and extensions. These changes will bring about a significant shift in how employers engage workers on a fixed term contractual basis.

The main changes encompass three key areas:

  1. Time Limitations: Fixed term contracts cannot exceed a duration of 2 years.
  2. Renewal Limitations: Contracts cannot have an option to extend or renew to lengthen the employment period beyond the stipulated 2-year period. Additionally, extensions or renewals cannot occur more than once.
  3. Consecutive Contract Limitations: Employees cannot be offered a new fixed term contract if specific conditions apply. These include if:
    • their previous contract was fixed term, and
    • their previous and new contracts are mainly for the same work; and
    • there is continuity in the employment relationship between contracts. 

Additional considerations include whether:

  1. the employee’s previous contract contained an option to extend and was used;
  2. the total period of employment is greater than 2 years;
  3. the new contract has a clause to extend; and
  4. the previous contract was fixed term, similar work and there was substantial continuity of the employment relationship.

These new rules do not cover casual employees and contain exceptions for certain types of fixed term contracts. 

Contracts made before 6 December 2023 won’t fall under these new limitations, but the rules will apply to fixed term contracts entered into on or after this date.

Employers are mandated to provide a Fixed Term Contract Information Statement (FTCIS) to new employees engaged under these contracts after 6 December 2023. This statement outlines the regulations and entitlements related to fixed term employment.

Download the Fixed Term Contract Information Statement (FTCIS) here »

Steps to Ensure Compliance

In order to ensure compliance with the new changes, we recommend that businesses take the following steps:  

  • Familiarise yourself with the new rules as per the Fixed Term Contract Information Statement (FTCIS) above
  • Conduct an audit of any current employees on Fixed Term Contracts within the business to assess if contracts will be compliant moving forward
  • Identify whether the business or individual employee may be exempt from the new changes 
  • Revise Fixed Term Contract templates terms and conditions to ensure you are compliant.  

These changes aim to protect employees and ensure fair employment practices, while simultaneously providing clarity and guidelines for employers navigating the realm of fixed term contracts.  

Need Assistance?

At Allan Hall HR, we have a team of experienced consultants to assist with all your employment contractual arrangements and ensure your business is compliant with current legislation. If you are uncertain about how the new legislation applies to your business, please feel free to call us on 1300 675 393 or contact us here. To learn more about our HR services, please click here.