HR tech important as wage underpayment to become a criminal offence

The Australian federal government will make wage theft a criminal offence from 1 January 2025, under its industrial relations reform package, the Closing Loopholes Act. This legislation aims to address intentional underpayment of workers, with penalties reaching up to $7.8 million for companies and ten years' imprisonment for individuals found guilty.

The reforms will apply to most organisations, with only those employing fewer than 15 workers exempt. Even these smaller businesses will remain subject to a voluntary code of conduct, though details of the code are yet to be released.

The government's initiative follows a series of amendments designed to modernise and tighten Australia's workplace laws, as outlined on the Fair Work Commission's website. These include provisions for casual employment reforms, protections against workplace discrimination, and regulations to improve the treatment of gig economy workers.

A call for technological modernisation

Adam Bowles, Managing Director for Australia and New Zealand at people management software provider OneAdvanced, weighed in on the forthcoming changes, highlighting the critical role of technology in achieving compliance.

"With wage underpayment becoming a criminal offence in 2025, Australian organisations can no longer afford to rely on outdated payroll processes or manual systems prone to error," Bowles said.

He underscored the importance of maintaining fair pay practices to build trust and protect organisational reputations.

"Fair pay is not just a legal obligation; it's essential to maintaining employee trust and safeguarding organisational reputation," he added.

Bowles suggested that embracing advanced people management software solutions could help businesses navigate Australia's complex labour laws effectively. "By leveraging people management software solutions, Australian businesses can ensure compliance, prevent wage theft, and foster a workplace culture grounded in transparency and fairness," he said.

Bowles urged organisations to act swiftly in preparation for the new regulations, stating, "This is the time for all organisations to act decisively, modernise their payroll and HR systems, and embrace technology."

A legislative framework for workplace fairness

The Closing Loopholes Act 2023 and its subsequent amendments in the Closing Loopholes No. 2 Act 2024 aim to address significant gaps in workplace regulation. The legislative package introduces changes to definitions of employment, reforms for casual workers, and enhanced rights for workplace delegates.

Among the changes are protections for those experiencing family and domestic violence, rights for workers in the gig economy, and measures to address "employee-like" roles. From August 2024, provisions such as the "right to disconnect" will also empower workers to seek greater work-life balance.

For labour hire and independent contractors, the legislation introduces minimum standards and dispute resolution mechanisms for unfair terminations or contract deactivations.

Smaller organisations, while exempt from criminal liability under the new wage theft provisions, are encouraged to align with the principles of the forthcoming voluntary code of conduct to ensure fair treatment of employees.

Looking ahead

The criminalisation of wage theft marks a significant step in the federal government's efforts to promote fairness in the workplace. Organisations are being urged to prepare for the 2025 deadline by reviewing and updating their payroll systems and labour practices.

As Bowles emphasised, technology will be pivotal in navigating these changes and ensuring compliance. By modernising their systems, Australian businesses have the opportunity to not only avoid penalties but also foster more equitable and transparent workplaces.

The government and regulatory bodies, such as the Fair Work Commission, are expected to provide further guidance on these reforms as the implementation date approaches.