Australia moves to criminalise wage theft

The Australian government has introduced legislation that will make deliberate underpayments to employees a criminal offence.

As part of its Closing Loopholes Bill, employers who will deliberately underpay employees will receive a maximum penalty of 10 years imprisonment and maximum fines of up to $7.8 million.

If the amount exceeds the maximum fine, the penalty will be three times the amount that was underpaid.

"This is the first time the level of penalty can be proportionate to the extent of the underpayment," the government said in a media release.

No criminal penalties for co-operative employers

Employment Minister Tony Burke assured that criminal penalties won't apply to employers who make honest mistakes, while pathways will be available for employers who self-report and repay their employees.

"Support will be provided by the Fair Work Ombudsman in educating employers on their responsibilities," Burke said.

The Fair Work Ombudsman will also have the discretion not to pursue criminal proceedings if the business enters into a co-operation agreement.

"Enforceable Undertakings for civil breaches will continue to be available where appropriate," Burke said.

The law follows recent announcements from major organisations who admitted to underpaying their staff, including Coles, Reserve Bank of Australia, and Commonwealth Bank of Australia, among others.

Ending the 'double standard' of wage theft

According to Burke, the introduction of the legislation will let the public know that wage theft cannot be resolved by merely paying the money back.

"It is just as much a criminal offence – if these laws go through – for the worker to steal from the employer as it is for the employer to steal for the worker. The double standard ends with today's legislation," Burke told ABC in an interview.

The minister added that current rules and penalties aren't doing enough to protect workers, especially those most vulnerable to wage theft such as women, young people, and migrants.

"It's clear the current rules and penalties aren't doing enough to protect workers. We need a strong new deterrent," Burke said.

The Albanese government's Closing Loopholes Bill also aims to introduce minimum standards for gig workers, close forced permanent casual worker loophole, and closing the labour hire loophole.

Employers, however, are expressing opposition over the latest industrial relations reforms.

"This is flawed, it's not the way forward and the bill should not be passed because the bottom line is this will not close loopholes," said Jennifer Westacott, chief executive of the Business Council of Australia.