New criminal underpayment laws started on 1 January 2025. Here's a reminder about what's changed.
What's changed
From 1 January 2025, intentionally underpaying an employee's wages or entitlements can be a criminal offence. This doesn't include honest mistakes.
We can investigate suspected criminal underpayment offences and refer suitable matters for criminal prosecution. If a person is convicted of a criminal offence, a court can impose fines, prison time, or both.
There are protections in place for businesses to avoid criminal prosecution. This includes the Voluntary Small Business Wage Compliance Code (Code) and cooperation agreements.
Code and Guide
We can't refer a small business employer's conduct for possible criminal prosecution if we're satisfied that they've complied with the Code in relation to an underpayment.
Check you're paying employees correctly
Use our Guide to paying employees correctly and the Code Guide to paying employees correctly and the Code for practical advice and tools, including a checklist, examples and best practice tips, to help you pay your employees correctly and comply with the Code.
A small business employer will comply with the Code if they didn't intend to underpay their employees. This will be assessed by looking at several factors. These factors aren't new to compliant employers. Instead, they're steps many already take as part of good business practice.
Businesses of all sizes can use the Code and supporting guide to ensure they are paying their employees correctly and quickly address any issues as they arise.
Download a copy of the Code and supporting guide at Voluntary Small Business Wage Compliance Code.
Cooperation agreements
A cooperation agreement is a written agreement between us and someone who has told us they've engaged in conduct that may amount to the criminal underpayment offence. While in force, we can't refer conduct outlined in that agreement for possible criminal prosecution. We may still consider civil enforcement options if necessary.
Download our new Guide to cooperation agreements Guide to cooperation agreements to learn more about the process, including how to request to enter one with us.
Learn more at Cooperation agreements.
What you can do now
You can:
- Use the Code and our Guide to paying employees correctly and the Code Guide to paying employees correctly and the Code to check employees are being paid correctly. The Guide offers practical advice and tools including a handy checklist, examples and best practice tips.
- Use our new cooperation agreements guide to learn more about the Cooperation agreement process, including how to request to enter one with us.
- Use our free tools and resources, including our calculators to check pay rates.
- Make sure you're prepared by learning more about Criminal prosecution.
Learn more about other recent Closing Loopholes changes.
For a visual snapshot of all the Closing Loopholes changes and when they start, check out our easy-to-read timeline.
Stay up to date
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