The dangers of wage theft for frontline businesses — and how it can be prevented

Employee underpayments (sometimes referred to as “wage theft”) are a serious compliance risk for frontline businesses. From 1 January 2025, intentionally underpaying certain wages or entitlements can be a criminal offence under Australia’s Fair Work Act — and honest mistakes are not captured by the criminal offence.

Alongside criminal enforcement for intentional conduct, civil penalties for underpayments have also increased, particularly for non‑small business employers.

For employers, this shift reflects growing regulatory and community expectations that businesses must take proactive steps to ensure workers are paid correctly. Regulators, boards, and employees are increasingly scrutinising not just whether errors are fixed, but whether appropriate systems and controls are in place to prevent them from occurring in the first place.

Across various frontline industries, the conditions for wage theft are often structural rather than intentional. Large, decentralised workforces, complex awards, variable rosters, and manual processes create an environment where underpayments can occur quietly and repeatedly. The danger lies not only in the initial error, but in how easily those errors scale.

Wage theft is usually systemic, not malicious

Most wage theft cases do not begin with deliberate wrongdoing. They emerge from small failures across multiple stages of the workforce lifecycle: an award rule interpreted incorrectly, a roster that breaches pay conditions, inaccurate time capture, or limited visibility into emerging patterns.

Individually, these issues may appear minor. Collectively, they create systemic underpayment. By the time the problem is identified — often through an employee complaint, union inquiry, or regulator audit — the financial and reputational damage is already done.

This is what makes wage theft particularly dangerous. It often remains invisible until it becomes unavoidable.

The cost extends well beyond back pay

When wage theft is uncovered, remediation rarely stops at repaying affected employees.

From 1 January 2025, civil penalties for certain underpayment contraventions (particularly for non‑small business employers) can, in some circumstances, be calculated by reference to the value of the underpayment (for example, multiples of the underpaid amount), not just a fixed penalty cap.

Under the new laws, companies and individuals can face criminal exposure for intentional underpayment. In a corporate setting, individuals (including managers or officers) may also face liability where they were knowingly involved in the offending conduct.

Reputational damage can be just as significant. Public underpayment cases hinder employee trust, damage employer brand, and undermine confidence among customers and stakeholders. Internally, remediation programs consume substantial time and resources as historical data is reconstructed and compliance failures are investigated, sometimes across several years.

For frontline businesses operating on tight margins, these impacts can be severe.

Why frontline environments are especially exposed

Frontline organisations face a combination of risk factors that make wage theft more likely. Awards and enterprise agreements are highly detailed and frequently updated. Workforces are large, shift-based, and variable. Rosters are often created under time pressure, and oversight is distributed across multiple locations and managers.

In these environments, wage theft is rarely caused by a single failure. It emerges in the gaps between systems and processes, where rules are reinterpreted, data is manually adjusted, and accountability becomes blurred.

Designing prevention into workforce processes with Humanforce

Avoiding wage theft requires more than correcting payroll errors after they occur. Particularly in the context of criminalised intentional underpayments, employers should take proactive steps to prevent and promptly correct underpayments — including using the FWO’s guidance. This means designing workforce processes that anticipate complexity and reduce the likelihood of errors at each stage of the employee lifecycle.

Humanforce supports this preventative approach by embedding compliance controls across Awards & Compliance, Rostering & Scheduling, Time & Attendance, Humanforce Payroll, and Workforce Analytics, so wage theft risk is addressed before it becomes systemic.

The starting point is Awards & Compliance, a pay conditions engine that applies award and enterprise agreement rules consistently. By interpreting pay conditions such as penalty rates, overtime, breaks, and entitlements in line with applicable agreements, it reduces reliance on manual interpretation and helps ensure shifts are categorised correctly from the outset.

Rostering & Scheduling can be configured to check/flag rules at the planning stage. Rosters are checked for compliance before shifts are worked, allowing potential breaches — such as insufficient breaks or unintended overtime — to be identified and corrected early, rather than carried through to payroll.

Accurate recording of worked hours is addressed through Time & Attendance. Secure, validated clocking helps ensure that paid hours reflect hours actually worked, reducing the risk of incorrect timesheets and disputes that can lead to underpayment or overpayment.

Once time and pay data has been validated through workforce planning and attendance, Humanforce Payroll plays a critical role in reducing wage theft risk. Integrated with the rest of the system, Humanforce Payroll receives award-interpreted timesheets, applies date-effective pay rates and entitlements, and automates complex calculations that are prone to error when done manually. Because it is part of the connected Humanforce HCM suite, employee data flows from workforce management into payroll, reducing duplicate data entry and human error while improving auditability and compliance.

Finally, Workforce Analytics provides visibility across the workforce, surfacing patterns and anomalies that may indicate emerging compliance risks. This enables organisations to move beyond reactive audits and identify potential wage theft issues early, before they escalate into widespread underpayment.

Together, these Humanforce capabilities operate as a connected workforce management system rather than isolated solutions that perform independent checks. By embedding compliance into awards interpretation, roster creation, time capture, payroll processing, and workforce analysis, Humanforce helps frontline businesses reduce wage theft risk and strengthen confidence that people are being paid correctly.

It’s important to remember that workplace compliance depends on correct award/EA selection, configuration, and accurate data; employers remain responsible for ensuring wages and entitlements are paid correctly.

Disclaimer: This document contains general information only and is not intended to constitute legal, financial, industrial relations or other professional advice. While care has been taken to ensure accuracy at the time of publication, the information may not reflect the most current legal or regulatory developments. Employers should not rely on this content when making decisions and should seek independent professional advice regarding their obligations under applicable laws and awards. Humanforce accepts no liability for any loss arising from reliance on the information contained in this document.

About Humanforce

Humanforce is the all-in-one platform for frontline and flexible workforces, offering a truly employee-centred, intelligent and compliant human capital management (HCM) suite – without compromise. Founded in 2002, Humanforce has a 2300+ customer base and over half a million users worldwide. Today, we have offices across Australia, New Zealand, the US and the UK.

Our vision is to make work easier and life better by focusing on the needs and fulfilment of frontline workers, and the efficiency and optimisation of businesses.

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