New wage theft laws: How they will benefit Aussie workers

New laws set to be introduced this week will get tough on bosses deliberately underpaying their workers. See what the changes mean for you.

Australian employers who are deliberately underpaying their workers will now risk jail time and million-dollar fines, in a loophole that’s set to be closed.

New legislation set to be introduced into parliament this week will include tougher penalties for employers guilty of wage theft, including a maximum 10 year prison sentence.

Workplace Minister Tony Burke said bosses will face wage theft fines up to $7.8 million or up to three times the amount that was underpaid, if that amount exceeds the maximum fine.

Workplace Minister Tony Burke. Picture: NCA Tertius Pickard

The crackdown on wage theft is the government’s latest tranche of workplace reforms contained in the Closing Loopholes Bill.

“I'm surprised it’s even been controversial. The objective here is not to send people to jail. The objective is to make sure that people are paid properly,” the minister told ABC’s Insiders.

“So there’s a combination of the changes we’re making with the prison terms being there, which I do think will sharpen the minds of the very few people who’ve engaged in this intention.”

So what does this mean for workers?

WHAT ARE THE CHANGES?

The Albanese government will introduce a bill on Monday to grant the Fair Work Commission (FWC) the power to set minimum standards for hundreds of thousands of “employee-like workers” on digital platforms from July 1, 2024.

The draft laws will create a new federal offence for wage theft which targets deliberate wrongdoing by businesses, and not those who make honest mistakes, or self-report and take reasonable steps to repay the correct wages.

Last year, the workplace watchdog recovered a record $532m in unpaid wages and entitlements for more than 384,000 workers across Australia.

A recent analysis by the McKell Institute found workers in the country were being underpaid nearly $850m per year, costing the economy more than $330m.

Under the new powers, the FWC will be able to initiate investigations into allegations of deliberate underpayment and have the discretion not to pursue criminal proceedings if the business cooperates.

Mr Burke’s new workplace reforms will also give union delegates greater powers in workplaces to access payroll data without notice if underpayment has been suspected.

The commission will be considering minimum standards for gig economy workers, including for pay, penalty rates, superannuation, payment terms, record-keeping, insurance and deactivation.

WHO WILL IT AFFECT?

The proposed laws will affect employers and their employees across all workplaces who are being deliberately underpaid.

The bill would also make it easier for casual workers to gain permanent roles, scrutinise the use of labour hire firms to undercut minimum pay rates, and introduce minimum standards.

The commission will be considering minimum standards for gig economy workers. Picture: David Crosling

WHY ARE THE CHANGES CONTROVERSIAL?

The proposed changes have triggered backlash from business and employer groups, who are concerned it would give unions access to personal documents.

“Sometimes in underpayment cases, all the records are impactful because, for example, people are clocking off and being told if you’re propped up and got to come back and keep working,” Mr Burke said.

“The only way you get to uncover and establish that that is in fact happening is if you arrive without the notice.”

Opposition Leader Peter Dutton said the proposals would raise living costs and negatively affect small business owners.

He told Sky News he would not consider supporting the legislation if it did not reduce flexibility for workers and employers and “make it harder for a small business to keep its doors open at a time when the government is making it harder for that business to be successful.”

“What we've seen so far, it would be very, very difficult for us to support what will be an economy-destroying piece of legislation and just another nail in the coffin of small business,” Mr Dutton said on Sunday.

Originally published as New wage theft laws: How they will benefit Aussie workers