Big changes to workplace laws have been rolling out since 2023 as part of the Closing the Loopholes legislation.
A key part of these changes, the Voluntary Small Business Wage Compliance Code (the Code), came into effect on the 1st of January 2025, providing small businesses with a clear framework to manage payroll compliance and avoid unnecessary headaches.
What exactly is the Voluntary Small Business Wage Compliance Code?
The Code serves as a bit of a lifesaver for small businesses with fewer than 15 employees, offering clear guidance to align your payroll practices with the Fair Work Act. After the introduction of the Closing the Loopholes legislation, it’s now a criminal offence to deliberately or negligently underpay your staff. But don’t worry, the Code was developed to support small business owners in fixing and preventing payroll errors while recognising the unique challenges they face.
Does this mean I could face criminal charges?
One of the most reassuring aspects of the Code is its focus on supporting small businesses that are genuinely trying to do the right thing. Criminal penalties are reserved for deliberate breaches or situations where businesses repeatedly ignore multiple opportunities to resolve issues.
If you’re acting in good faith, taking steps to fix mistakes, and following the guidance provided, you can focus on improving your payroll processes without fear of criminal prosecution.
Why would I get investigated?
Fair Work may start an investigation for a few reasons. For example, an employee or employer might ask for help, or someone could report suspected non-compliance. Sometimes, Fair Work conducts proactive audits or acts on feedback from stakeholders. Their goal is to check compliance and, importantly, support businesses in sorting out any issues.
What happens if I do get investigated?
Fair Work has a structured process they follow if they identify a breach. They’ll start by explaining their findings and outlining what needs to happen next. If the issue isn’t resolved, they may issue formal notices, penalties, or agreements to encourage compliance. Court action is a last resort, used only for the most serious or ongoing breaches to uphold workplace laws.
Key takeaways
The Code supports honest businesses
Criminal charges are off the table for payroll errors if you’re acting in good faith and genuinely trying to comply. Serious penalties are reserved for deliberate or negligent breaches.
Mistakes must still be fixed
Even with the Code’s protections, you’ll need to correct payroll errors by back-paying employees and addressing any non-compliance. Acting quickly can minimise fines and disruption.
Compliance is an ongoing effort
Compliance isn’t a one-and-done task. You need to regularly review workplace rules, update records like pay rates and employee classifications, and ensure your payroll processes stay on point.
What should I do next?
The Code is here to help small businesses manage payroll compliance effectively. Staying proactive means fewer headaches, stronger trust with your team, and peace of mind knowing you’re doing the right thing.
Now’s the perfect time to review your payroll processes and ensure everything’s on track. The Code isn’t about catching you out, it’s designed to support you in creating a fair and compliant workplace. Take advantage of the tools and resources available, like those from Audit My Payroll or the Fair Work Ombudsman, to manage payroll smoothly and focus on what you do best.
For guidance and support, visit the Fair Work Ombudsman’s website or get in touch with Audit My Payroll today.