Wage Audit Guide – What Managers Need to Know About Australia’s New Wage Theft Laws

Australia has introduced stricter wage theft laws, making it more important than ever for businesses to ensure wage compliance. Employers who fail to pay workers correctly—whether through underpayments, unpaid overtime, or incorrect classifications—can now face severe penalties, including criminal charges. To avoid legal risks, businesses should conduct regular wage audits and payroll audits to identify and rectify errors before they become costly.

This guide explains what managers need to know about wage theft laws and how to complete a wage audit to ensure compliance.

What is Wage Theft Under Australian Law?

Under recent legislative changes, wage theft is now considered a criminal offense in several Australian states, including Victoria and Queensland, with national laws tightening enforcement. Wage theft occurs when employers intentionally underpay workers, fail to pay entitlements such as superannuation or overtime, or falsify payroll records.

Companies found guilty of wage theft can face:

• Large fines for each underpayment breach.

• Criminal penalties, including potential jail time for responsible individuals.

• Reputational damage that impacts business operations.

Given these serious consequences, conducting wage audits and ensuring wage compliance should be a top priority for all managers.

How to Complete a Wage Audit

To ensure full compliance with Australia’s new wage theft laws, managers should follow these steps to conduct a payroll audit effectively:

1. Review Employee Classifications

• Ensure all employees are classified correctly (e.g., casual, part-time, full-time, contractor).

• Misclassification can lead to underpayments and legal action.

2. Check Minimum Wage and Award Rates

• Verify that wages align with Fair Work Commission updates.

• Make sure penalty rates, overtime, and allowances are correctly applied.

3. Audit Payroll Records

• Compare payslips, rosters, and timesheets to ensure accurate wage payments.

• Look for discrepancies in hourly rates, overtime calculations, and deductions.

4. Superannuation and Leave Entitlements

• Ensure superannuation contributions are paid correctly and on time.

• Check if annual leave, sick leave, and long service leave are properly accrued and paid.

5. Identify and Correct Underpayments

• If errors are found, rectify them immediately and document the corrective actions.

• Offer back payments to affected employees to avoid potential legal consequences.

Why Legal Audits Are Essential

Given the complexity of Australia’s wage theft laws, many businesses benefit from conducting legal audits with an employment lawyer. A legal audit provides expert oversight to:

• Identify potential legal risks in payroll practices.

• Ensure compliance with industry-specific award conditions.

• Implement corrective measures before government investigations occur.

The Importance of Ongoing Compliance

Businesses that ignore wage audits risk severe penalties under Australia’s new wage laws. Regular payroll audits not only prevent wage theft but also help maintain trust with employees and protect your company’s reputation.

Managers should act now by conducting wage audits, updating payroll systems, and seeking legal guidance if needed. Staying compliant today prevents costly mistakes in the future.