Plain guide · Small business and the award

Is my small business at risk of wage theft charges?

If you run a small business and pay staff under an award, that question has probably crossed your mind at some point, usually late at night. The law did change. Here is what it actually means for you, in plain terms. And a simple way to know you are on the right side of it.

What actually changed

Since 1 January 2025, deliberately underpaying wages is a criminal offence in Australia. The penalties are large. For a serious case they run to years of imprisonment and fines in the millions. Read that on its own and it is enough to put anyone off their sleep.

So hold onto two things. The offence targets deliberate underpayment, the employer who chooses to short their staff. It is not aimed at an honest mistake. And an honest mistake is what the great majority of underpayment turns out to be.

Most underpayment is a drift, not a crime

The Fair Work Ombudsman recovered $358 million for more than 249,000 workers in the 2024-25 year. Very little of that came from businesses trying to cheat anyone. It came from ordinary setups that quietly drifted out of line. These are the common traps.

Salary drift. An annualised salary set a few years ago that slipped below the award floor after each 1 July increase.
Wrong classification. A role sitting on the wrong award level so the base rate is off before anything else is calculated.
Casual or contractor. Someone treated as a casual or a contractor when the award says otherwise.
Allowance lag. Allowances that never moved when the base rate rose so the pay is right in part and short in part. How the allowance rise actually works.

None of these is a sign of a bad employer. They are easy to fall into and easy to miss, which is exactly why they are so common. Finding them means placing each role on the right award level and testing the pay across the whole roster. The Wage Compliance Check does that for you and leaves you the proof.

Some industries feel this harder than others because the roster itself is more complex. See how it plays out in hospitality pay.

The good news if you employ under 15 people

There is a path built for small business and it is worth knowing about. It is the Voluntary Small Business Wage Compliance Code. If you have fewer than 15 employees and you follow the Code, you are protected from criminal prosecution for underpayment. Civil penalties can still apply. But the criminal risk comes off the table. That is the part that actually keeps you awake.

The Code is not complicated. In plain terms it asks you to make a genuine effort to get pay right, to keep up with your obligations, to rely on accurate details about your people and to seek advice from a reliable source when you need it. That last point is the one to notice. A free online rate calculator does not meet it. Advice from someone who reads awards for a living does.

The part that matters

Following the Code is what shields a small business from the criminal side. And it specifically points to getting advice from a qualified person, not just running a number through a website.

How to know where you stand

You do not need to become an award expert to sleep at night. The practical path is short. Get someone to check what you actually pay against what the award requires. Fix anything that is off. Keep a dated record that shows you did it. That record is the thing that demonstrates you took reasonable steps.

That is exactly what a Wage Compliance Check is for. You answer a short set of questions about your roles and your pay. The classification and the award maths are done for you and checked by someone with 25 years in industrial and employee relations. You get a straight answer on whether your rates clear the award, a plain list of anything to fix and a dated record you keep. Then a yearly look keeps it current as the rates move each July.

If you are not sure an award even applies to your situation, start with the free checklist. And if your staff are on an enterprise agreement rather than an award, that is a different read and the EA review covers it.

This is general information to help you understand your obligations. It is not legal advice. Award rates change every 1 July so any check is correct as at the date it is done, which is why a yearly look matters.

Common questions

Is wage theft really a crime now?

Since 1 January 2025, deliberately underpaying staff is a criminal offence in Australia. It targets deliberate underpayment. An honest mistake is treated differently. Most underpayment is an honest mistake.

I employ fewer than 15 people. Am I protected?

There is a path built for you. The Voluntary Small Business Wage Compliance Code protects a small business that follows it from criminal prosecution. Following it and keeping the proof is what a Wage Compliance Check gives you.

How do I know if I am underpaying anyone?

The causes are quiet. An annualised salary that slipped below the award after July. A role on the wrong level. A casual treated as a contractor. An allowance that never moved. A check finds them across your whole roster.

What should I do if I find an underpayment?

Fix it, back-pay the gap and keep a dated record that shows you acted. That record is what demonstrates you took reasonable steps.

What does a check cost?

A one-off Wage Compliance Check is from $440, with an annual option to keep it current as the rates move. Far less than a full payroll audit, which runs into the thousands.

The relief is in the proof

Get the number checked once and keep the proof.

Getting your pay setup right is trickier than it looks and easy to second-guess. A Wage Compliance Check gives you a straight answer and the record that shows you did the right thing so you can stop worrying about it and get back to your business.

Get a wage compliance check
or email ryan@carringtonworkforcerisk.com