In Australia, workplace laws relating to wage and salary payment apply to all employees, regardless of their country of origin or visa status.
The penalties for failing to uphold the correct employment standards can be harsh, fines and penalties can be imposed by the regulators and result in a company’s name being added to a public Prohibited Employer Register so it is important to ensure compliance as an employer.
Employee pay and condition rights in Australia
As explained by Fair Work Ombudsman Anna Booth, “Lawful minimum rates apply to all employees in Australia, and they are not negotiable. All workers in Australia have the same rights, regardless of nationality and visa status.”
From 1 July 2024, the national minimum wage for any adult employee is $915.90 based on a week of 38 ordinary hours. Some exceptions to minimum rates may apply to apprentices, Australians under the age of 18, or individuals with disabilities. In addition to the minimum, casual employees must be paid 25% on top of the national minimum wage.
There are also rules relating to pay and conditions covered by enterprise agreements and modern awards. There is a list of National Employment Standards including the maximum numbers of working hours in a week, paid annual leave, parental leave entitlements, superannuation payments, redundancy pay and more.
There are penalties for what is termed as ‘wage theft’, including fines and potentially even imprisonment for the company representatives.
Examples of underpaying employees
The Fair Work Ombudsman has the power to review the activities of all employers in relation to pay and working conditions. While some underpayments may happen due to a miscalculation or human error, penalties will apply if a company has failed to respond to a penalty notice or is found to have deliberately underpaid its employees.
“Lawful minimum rates apply to all employees in Australia, and they are not negotiable. All workers in Australia have the same rights, regardless of nationality and visa status.”
Fair Work Ombudsman Anna Booth
To share an example, a Melbourne IT company was recently penalised for failing to calculate and back-pay entitlements. The affected employees included an Indian national and a Pakistani national, who were on temporary visas. Both the Director and the company were fined a total amount of $21,578. According to the Fair Work Ombudsman, the company failed to comply with two Compliance Notices. It was ordered to pay outstanding back pay and entitlements in addition to the financial penalty.
In another case, a $550,000 penalty was issued to a Sydney company found to have deliberately and systematically underpaid migrant employees. The company’s sole director and general manager also faced a separate $8,190 penalty. Overall, between 2014 and 2019, the company was found to have underpaid nearly 400 employees – most from migrant backgrounds – a total of more than $3.6 million.
Three of the underpayment contraventions met the definition of ‘serious contraventions’ under the Protecting Vulnerable Workers laws. When this is the case, the maximum fine is ten times the standard penalty.
A final and very recent example coming from a prominent organisation, World Vision Australia, which self-reported underpayments following an internal review. Staff were back paid more than $6 million, including interest and superannuation. After the issue was reported, World Vision Australia signed an ‘Enforceable Undertaking’ and committed to implementing measures to ensure its team is paid correctly, including a new time and wages payroll system and at least one annual audit.
Consequences of underpaying foreign employees
New criminal sanctions came into place in Australia in July 2024 to crack down on the exploitation of migrant workers.
As part of the new laws, there are now criminal and civil penalties for anyone who unduly influences or coerces a migrant employee to breach a work-related condition of their visa or accept an exploitative work arrangement to meet a work-related condition of their visa, such as acceptance of pay rates lower than the legal minimum rates or the guaranteed earnings of their visa.
To add to this, if a company is found to systematically underpay visa holders, it may be prevented from employing temporary or sponsored visa holders in the future. The business’s name may also be added to a Prohibited Employer Register.
How to avoid underpaying foreign nationals
No matter who you employ, their pay and conditions must be fair and comply with Australian laws. The Fair Work Ombudsman offers tools so migrant employees can check their pay and conditions, and options to submit an anonymous report if they believe they are not being paid correctly.
As an employer, you can check the Pay and Wages and Employment Conditions sections of the Fair Work Website, or speak to The Migration Agency to confirm your employees are receiving the right amount of pay.
