19/02/2025
A number of changes to the Fair Work Act 2009 (Cth) (Fair Work Act) and fair work instruments have come into effect from 1 January 2025. These changes largely relate to pay rates and payment of other amounts owing to employees. With the new criminal offence for wage theft in particular, it is critically important that employers are making the correct payments to their employees.
Griffin Legal’s team of employment law experts can assist employers with reviewing pay rates and ensuring compliance with all legislative obligations.
New criminal offence for intentional wage theft
As of 1 January 2025, the Fair Work Act contains a new criminal offence for certain employers who intentionally underpay their employees.
It is now an offence for most employers to underpay employees, including underpayment or non-payment of:
- wages;
- amounts owing under the Fair Work Act; and
- amounts owed under a modern award, enterprise agreement, individual flexibility arrangement or a transitional legislative instrument.
There are narrow exceptions for some employers that exclude superannuation contributions, long service leave, paid leave connected with the employee being a victim of crime, or paid leave relating to jury duty or emergency services duties from the offence provisions.
These exceptions apply only to a narrow cohort of sole traders, partnerships, unincorporated entities and non-trading corporations in some States, and some government employers.
Employers should be aware of how the offence provisions may apply to them.
The penalties for breaching section 327A are significant: up to $7.825 million for companies and, for individuals, up to $1.565 million and a maximum prison sentence of 10 years.
Small businesses employing less than 15 people cannot be prosecuted for underpaying employees if they can demonstrate compliance with the Voluntary Small Business Wage Compliance Code.
Employers should ensure all arrangements are properly documented and are consistent with the minimum entitlements of employees. Our employment law team can provide advice on these arrangements.
Changes to entry-level classifications in modern awards
For 45 modern awards, classifications below the C13 rate (currently set at $915.90 per week) must now be entry-level classifications which apply to an ongoing employee for no more than 6 months, and provide the employee with a clear transitional path to a higher rate of pay.
Effectively, these classifications should now only be used for introductory and training purposes. Employees under the affected awards should then be moved to a higher classification no more than six months after their commencement.
Employers should consider seeking legal advice in relation to any ongoing employment arrangements based on pay rates below the C13 rate.
Pay rises for aged care workers
As part of its Aged Care Work Value Case, the Fair Work Commission has varied a range of modern awards and increased minimum pay rates for eligible employees working in the aged care sector. The changes include:
- an update to classification schedules under the Aged Care Award
- transition of nursing assistants working in aged care from the Nurses Award to the Aged Care Award or the Social, Community, Home Care and Disability Services (SCHADS) Award, and
- pay increases for direct care workers covered by the Aged Care Award, general care workers covered by the Aged Care Award and aged care employees covered by the SCHADS Award.
New minimum pay rates have been published in the Aged Care Award and SCHADS Award. Certain aged care employees will be eligible for a further pay increase from 1 October 2025, with the updated pay rates to be published later this year.