Unveiling the Latest Criminal Underpayment Legislation: What You Need to Know

Published 2 January 2025

New criminal underpayment statutes commenced on 1 January 2025. Here’s a summary of what’s been modified.

On this page:

What’s been modified

As of 1 January 2025, deliberately underpaying an employee’s wages or entitlements could result in a criminal charge. This does not include genuine errors.

We are able to investigate suspected criminal underpayment violations and refer applicable cases for criminal prosecution. If an individual is found guilty of a criminal charge, a court may impose fines, prison sentences, or both.

There are safeguards available for businesses to help prevent criminal prosecution. This includes the Voluntary Small Business Wage Compliance Code (Code) and cooperation agreements.

Code and Guidance

We cannot refer a small business employer’s actions for potential criminal prosecution if we are convinced that they have adhered to the Code in relation to an underpayment.

A small business employer will be compliant with the Code if they did not aim to underpay their employees. This will be evaluated by considering various factors. These elements are not new to compliant employers; rather, they are practices that many already adopt as part of sound business operations.

Companies of all sizes can utilize the Code and supporting guidance to ensure they are compensating their employees correctly and swiftly resolve any issues as they emerge.

Cooperation agreements

A cooperation agreement is a documented arrangement between us and an individual who has informed us they have engaged in behavior that may constitute the criminal underpayment offence. While this agreement is in effect, we cannot refer the behavior detailed in that agreement for potential criminal prosecution. We may still evaluate civil enforcement options if deemed necessary.

Discover more at Cooperation agreements.

Actions you can take now

You can:

Discover more about other recent Closing Loopholes changes.

For a visual overview of all the Closing Loopholes adjustments and their starting dates, check out our easy-to-read timeline.

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