Payroll update for small business owners

From 1 January 2025, an employer who intentionally underpays an employee, can be subject to criminal prosecution.

The Fair Work Ombudsman have created a guide to paying employees correctly, and the Voluntary Small Business Wage Compliance Code can help small businesses take steps to pay employees correctly.

This guide is for small businesses who employ less than 15 employees and helps them understand and access the protections of the Voluntary Small Business Wage Compliance Code (the Code) in their business.

Small business employers who have not intentionally underpaid their employees can access the protections of the Code to avoid criminal prosecution for underpayments.

From 1 January 2025, if an employer intentionally underpays an employee, they can be subject to criminal prosecution. Underpayment may include:

• Not paying sufficient wages, including penalty rates, overtime rates and allowances (or not paying them at all).

• Not paying amounts required by the applicable award or enterprise agreement.

• Not paying other entitlements, for example superannuation for some employees.

 The criminal offence does not apply for underpayments that happen because of a genuine mistake.

It’s not just the business owners who can be prosecuted for criminal underpayments. Others involved in an underpayment can also be held criminally responsible also, including payroll managers or accountants in the business where their conduct contributed to an intentional underpayment.

 For more information, visit the Fair Work website.