Wage Theft by Employees: The Cost You Don’t See Coming

It is not always dramatic or obvious. Sometimes it starts small – rounding up a timesheet here, taking sick leave for reasons that do not align with entitlements, or “double-dipping” into overtime. Left unchecked, these behaviours can escalate and become embedded in workplace culture, creating financial and ethical risks for employers.

What Constitutes Wage Theft by Employees?

Wage theft occurs when a person dishonestly gains money or entitlements they are not lawfully entitled to. In the context of employees, it can include:

• Claiming payment for hours not actually worked
• Misusing sick leave or carer’s leave without valid reasons
• Inflating overtime hours or working unauthorised overtime and demanding payment
• Misclassifying allowances or entitlements
• Colluding with others to manipulate rostering systems or payroll.

In legal terms, wage theft by employees falls under fraud and theft provisions. Under the Crimes Act 1900 (NSW) and similar state legislation, dishonestly obtaining a financial advantage by deception is a criminal offence.

While employer underpayment has dominated headlines in recent years, cases of employee wage theft are not unheard of. Some examples include:

Monash Health Timesheet Fraud

Vivian Milonas worked in food services at Monash Health for many years. Between 2007 and 2013 she submitted timesheets incorrectly. She claimed penalty rates for hours when she did a different position which did not qualify for them. The falsified records led to her termination when the misconduct was discovered. The courts upheld her termination. Herald Sun

Public Sector Overtime Fraud in Queensland Health

A former employee of Queensland Health was convicted of claiming overtime for work not performed. Over a 17-month period the person falsely claimed almost AUD $40,000 in overtime payments. icac.sa.gov.au

Although these cases do not receive the same level of public scrutiny as systemic underpayment by large corporations, they demonstrate that wage theft by employees can and does occur, often costing businesses thousands, if not millions, of dollars.

The Impact on Business

The financial impact of employee wage theft is only part of the story. Just as significant is the cultural damage it creates:

• Financial Loss: Small increments of fraud, such as 15 minutes added to every shift, may seem minor, but multiplied across government agencies and businesses, it becomes a substantial cost.
• Trust and Morale: Discovering that colleagues are manipulating entitlements erodes workplace trust. Honest employees may feel disillusioned if they see misconduct going unchecked.
• Reputation Risk: For government agencies or high-profile businesses, wage theft by employees can attract external scrutiny, audits, and even public reporting.
• Compliance and Governance: Government agencies and business must demonstrate strong financial stewardship. Weaknesses in timesheet or payroll systems expose governance risks.

Are You Protecting Integrity in Every Direction?

Wage theft is not only an issue of employers underpaying workers. It also extends to employees dishonestly claiming money or entitlements they are not owed. For government agencies and businesses, the lesson is clear: Financial integrity must be safeguarded on both sides of the employment relationship.

At Noble Shore, we assist government agencies and businesses in building strong governance frameworks that prevent fraud, misconduct, and wage theft. Through independent investigation and probity advisory, we help employers manage risks and maintain trust across their workforce. Because in any workplace, integrity is not just expected – it is essential.