Wage Theft: Financial Crime Or Payroll Mistake?

Tailored Accounting (1)

Public discourse around wage theft generally devolves into accusations of big businesses ripping their employees off intentionally, but many other instances of the crime occurring are inadvertent, due to the complexity of Australia’s payrolling system.

Wage theft appears across a broad range of industries and disproportionately impacts young people, overseas students, migrant workers and women, in general.

It is legally defined as the deliberate and dishonest withholding or underpayment of wages from employees or the falsification or avoidance of keeping employer records in order to obtain an advantage.

In some instances, this underpayment is a deliberate action by companies or individuals. It can involve employers:

  • paying hourly rates below the national minimum rate;
  • failing to pay overtime and penalties;
  • making unlawful cash deductions from wages for things like breakages & accommodation;
  • paying cash-in-hand;
  • enforcing illegal cash-back schemes;
  • and failure to pay superannuation.

In a large number of cases, however, this is caused by confusion at the payroll level.

The complexity of the legal documents that outline minimum pay rates and conditions of employment (awards) often results in many employers unknowingly underpaying their workers.

Typical mistakes that can cause this include:

  • Incorrect interpretations of how overtime should be calculated
  • Incorrectly classifying employees (casual or part-time, contractor, etc)
  • Mistakes made by payroll as a result of lacking data around dates and times of people working
  • Incorrect or mistaken applications of awards (or lack thereof) to an employee’s salary.

At state levels, there is specific legislation and amendments to criminalise wage theft, which could incite significant financial penalties for companies or individuals. It is treated as a crime in Victoria and Queensland, which means that employers in those states can face criminal charges, convictions and up to 10 years of imprisonment. It is currently up to the states and territories to police these offences as necessary, as there is no current federal legislation in place (this could change pending plans from Labor).

Thank you for reading!
Should you have any queries in regards to the above please contact our office on (03) 9728 1448

The TAS Team
3/653 Mountain Highway, Bayswater VIC 3153

Dorothea Farmakis (CPA)


Dorothea, our CPA Qualified Accountant (Registered Tax Agent), has over 25 years experience within international corporate firms in Accountancy, Funds Management and Asset Management for firms such as HSBC, P&O, Lend Lease and more.




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