In 2025 Australian employers covered by the Fair Work Act may commit a new criminal wage theft offence if they intentionally underpay wages or other benefits (such as superannuation). Corporate employers face heavy fines with potential penalties and persons could be liable to imprisonment. Given the particular features of shopping centre operations that create issues for wage compliance, centre owners and managers should be reviewing their risk management in this area. If compliance issues are ignored or dealt with ineffectively, the risk of prosecution will increase exponentially.
Understanding the new wage theft offence
The wage theft offence will be one of absolute liability. This means the employer will not have a defence on the basis that it underpaid the employee by reason of honest reasonable mistake.
In practice, inadvertent or unintentional underpayments will not be captured by the offence. The employer must have intended not to pay the required wage/entitlements due in full or knew it was likely to occur in the ordinary course of events. Additionally, if an employer was made aware by an employee that they suspected they had been underpaid, and the employer took no action, then that may constitute wage theft. However, it won’t arise if the employer can show it took reasonable precautions to prevent the conduct. Raising this defence will be very difficult if there is evidence of a corporate culture that encouraged or tolerated non-compliance.
The new criminal offences supplement existing civil remedy provisions in the Fair Work Act that regulate wage compliance. All employers, including shopping centre owners and managers, will be familiar with the role played by the Fair Work Ombudsman (FWO) and unions in enforcing payment obligations under awards, enterprise agreements and the National Employment Standards. Aside from the potential legal exposure, reports of wage underpayments can significantly damage the brand and reputation of a business in terms of customers, shareholders and employees.
Five years ago, FWO undertook an inquiry into cleaning arrangements in the cleaning labour supply chain deployed by a leading supermarket chain. The inquiry found that, at the time, the approach to procurement and oversight of its cleaning contracts had contributed to a culture of non-compliance. This resulted in significant underpayment of cleaners, multiple levels of subcontracting in breach of service agreements, networks of corporate structures reliant on the engagement of vulnerable workers, inaccurate and/or false records, difficulties in identifying the true employers of labour within a supply chain, and inadequate monitoring and identification of who is cleaning each site.
Managing wage compliance in a shopping centre supply chain
Achieving wage compliance in a shopping centre has special challenges. The workforce is typically distributed across multiple contractors providing core services like cleaning, maintenance and security. Some of these industries are targets for FWO and other regulators because of their history of worker exploitation or underpayment. Unions with coverage of the sector are quick to highlight these cases in order to unionise these employees. Industrial campaigns are using innovative techniques to apply pressure to employers.
Shopping centre managers do not typically employ the bulk of employees at a centre. However, they are legally responsible for managing rights of entry for union officials and inspectors from regulators. The centre has shared responsibility under safety and discrimination laws. As the principal party contracting with different employers in the supply chain, they can be found to be accessories to Fair Work Act contraventions by those employers.
For shopping centre management, ensuring compliance across the supply chain will also help protect its brand reputation and preserve its public profile. Taking an active approach will safeguard the reputation of their shopping centre and maintain investors.
A proactive approach to wage compliance
A risk management approach might entail the following:
- Review processes – what procedures are in place to respond to union officials and inspectors who attend on site? Are safety hazards being managed appropriately? Are centre management staff trained in these procedures?
- Reviewing current contractor relationships – what systems are in place to ensure contractor employers are meeting their industrial law obligations?
- Audit compliance – require evidence that applicable industrial instruments are being observed.
- Educate – inform contractors about their legal obligations under the Fair Work Act and other workplace laws, and provide training on compliance issues, such as wage entitlements, penalty rates and allowances.
- Escalate issues – FWO has indicated that voluntary disclosure of wage underpayments can mitigate enforcement action. By encouraging contractors to self-report any wage discrepancies, it is possible to facilitate a resolution without punitive measures being applied.
Achieving wage compliance across a supply chain requires a systematic approach that involves the right mix of education and accountability. Prevention is the aim, but it is equally important to plan for the appropriate response when issues arise. FWO is more likely to litigate in cases involving parties whom have a prior history of contraventions and whom have not taken adequate steps to ensure compliance despite being advised of the consequences in the past.
This article by Holding Redlich State Managing Partner for Melbourne, Charles Power, and Associate Phina Macaulay is featured in the latest issue of SCN magazine.
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