Given the quantum of potential penalties under the wage and super theft provisions it is imperative employers understand what awards or instruments their employees are employed under.

Employees covered by the new rule for superannuation contributions

If an employer does not make superannuation contributions as required by the Fair Work Act(FWA), through a Fair Work instrument, for example, an award or enterprise agreement, or a “transitional instrument” (with the exception of employment contracts) then they may be subject to the new provisions

Employees exempt from the new rule

All employees covered by the FWA under the referral of industrial relations powers by a State or Territory are exempt from this new provision in relation to superannuation contributions.

The new wage theft rule do not apply for employees covered under the FWA because of these State or Territory referral powers for long service leave, approved victim of crime leave, jury duty entitlements or emergency services duties entitlements.

What is wage or superannuation theft?

If an employer “engages in conduct” (meaning, “do an act or omit to perform an act”) with the intention of not paying the required amounts “to, on behalf of, or for the benefit of, the employee in full on or before the day when the required amount is due for payment” the employer may be charged with wage or superannuation theft.

Under these new provisions, employers will have an absolute liability to pay an amount under FWA but the prosecution will have to prove that the employer had the actual intention to pay a lower amount.

"If an employer “engages in conduct” (meaning, “do an act or omit to perform an act”) with the intention of not paying the required amounts “to, on behalf of, or for the benefit of, the employee in full on or before the day when the required amount is due for payment” the employer may be charged with wage or superannuation theft."

Intention vs absolute liability

The new wage theft provisions state that they may apply if an employer “engages in conduct” with the intention of not paying the required amount on or before the required time.

The explanatory memorandum explains this provision in the following way:

…the prosecution will have to prove beyond reasonable doubt that the defendant intended that their conduct would result in a failure to pay the required amount to, on behalf of, or for the benefit of, the employee in full on or before the day when the required amount is due for payment.

For there to be an offence, the person must mean to bring about the result (that is, a failure to pay the required amount), or be aware that result will occur in the ordinary course of events (refer to section 5.2 of the Criminal Code).

This makes clear that underpayments that are accidental, inadvertent or based on a genuine mistake are not caught by the provision.

If, however, an employer paid an employee $10 per hour, knowing it was below the minimum wage, the resulting failure to pay the required amount (whatever it may be) would be intentional, and caught by the provision. Exact knowledge of the required amount (to a dollars and cents value) would not be required to establish the offence.

Potential penalties

If a Court determines the underpayment of wages or superannuation the penalty will be up to the greater of three times the underpayment amount and:

• individual – 5,000 penalty units (currently $1.565 million; but increasing to $1.65 million)
• corporations – 25,000 penalty units (currently $7.825 million; but increasing to $8.25 million)

In other cases, fines will be up to:

• individual – 5,000 penalty units (currently $1.565 million; but increasing to $1.65 million)
• corporations – 25,000 penalty units (currently $7.825 million; but increasing to $8.25 million)

Super contributions potentially caught by this provision

We believe it covers many super contributions including:

• SG contributions paid late including those which leave an employer’s bank account in time but for whatever reason are not allocated to an employee’s superannuation fund’s bank account by the required date.
• SG contributions unpaid or underpaid by the due date.
• Any other contribution for example, employer contributions greater than the SG minimum contribution requirements or after-tax employee contributions mentioned in an award or industrial instrument to be made by a specified time that are not allocated to an employee’s superannuation fund’s bank account by the due date.
• The amount of all other contributions unpaid or underpaid.

In these circumstances it would be up to an employer to demonstrate that the delay, underpayment or non-payment of contributions was beyond the employer’s control or was an inadvertent error.

Who can initiate actions under these provisions?

Action can only be taken by the Australian Federal Police and/or the Commonwealth Department of Public Prosecutions.

Commencement date

This provision will commence on 1 January 2025.

For “small businesses” this provision will commence on a different date if the relevant Minister issues a Voluntary Small Business Wage Compliance Code legislative instrument. If that instrument is issued, it will define what type of “small business” it involves. This voluntary code may contain different compliance rules for small business.

Wage theft provisions in State/Territories legislation

A number of States and Territories have wage and superannuation theft provisions in place and these are currently subject to a High Court challenge.