The Fair Work Ombudsman, Ms Anna Booth, issued a media release on 29 October 2025 stating that it has recovered $358 million for more than 249,000 underpaid workers in 2024-25, bringing the total amount of back pay recovered for workers to a staggering $2billion. This highlights the growing focus on Fair Work Ombudsman investigations into wage underpayments and the serious consequences for non-compliant employers.
Employers are on notice that the Fair Work Ombudsman will not only seek to recover underpayments from businesses but will also seek penalties from employers who flagrantly disregard worker entitlements.
Are you at risk?
In 2024-25, the Fair Work Ombudsman commenced 73 new cases in 2024-25 and it appears the Ombudsman will continue to pursue business who fail to pay employee entitlements.
Around 60 per cent of recoveries in 2024-25 came from large corporate sector employers with a combined recovery of back pay amounting to almost $213 million to nearly 118,000 underpaid employees. The Fair Work Ombudsman has indicated that large corporates will continue to be a priority to the FWO.
This also means that 40 per cent of recoveries came from smaller businesses, who are not immune to enforcement action. This reinforces the need for payroll compliance for small businesses, especially those operating in high-risk sectors.
In that regard, the Fair Work Ombudsman has identified several high-risk industries for Fair Work investigations, including aged care, disability support services, hospitality, and construction. Ms Booth said in the release (emphasis added):
“We are continuing our intelligence-led, priority-driven work in 2025-26, targeting the high risk sectors of aged care services, agriculture, building and construction, disability support services, fast food, restaurants and cafés, large corporates, and universities.”
The release continued to say:
“The FWO secured a record total of $23.7 million in court penalties in 2024-25. In addition to Sushi Bay, major litigation outcomes included the FWO securing $5.1 million in penalties against Blue Sky Kids Land Pty Ltd, Q Fay Trading Pty Ltd and their company directors, related to migrant workers, who spoke limited English, being paid as little as $10 an hour. Protecting the workplace rights of visa holders remains a priority for the FWO.”
Are you committing a criminal offence?
From 1 January 2025, intentionally underpaying employees their wages is a criminal offence. This change in law means wage theft is now a criminal offence in Australia, and employers must take proactive steps to ensure compliance.
An employer may commit a criminal offence where they were required to pay entitlements, such as wages or leave entitlements or superannuation entitlements on behalf of the employee, and they intentionally did something that resulted in those amounts not being paid.
Whilst it is unfortunate that some businesses will purposely seek to underpay employees, a failure to implement systems and robust checks and balances that mitigate the risk of underpaying your employees can also be at a business’ peril as it can lead to inadvertent underpayment of employee entitlements.
What about honest mistakes?
Honest mistakes aren’t considered a criminal offence, and a small business employer (i.e. less than 15 employees) won’t be referred for criminal prosecution if they’ve taken steps to ensure their staff are paid correctly in accordance with the Voluntary Small Business Wage Compliance Code.
That said, civil penalties may still apply so it is important to be on top of your payroll obligations to avoid costly errors. Even civil penalties for payroll errors can be costly and damaging to your business reputation.
Our applicable award is confusing
If you’ve looked at the applicable award and scratched your head trying to work out what it means, you’re not alone. Many employers struggle with how to interpret modern awards in Australia, which can lead to inadvertent breaches. Misinterpreting awards is one of the most common underpayment risks for Australian businesses.
Some awards are more difficult to interpret than others.
If you haven’t undertaken a review of your payroll recently, we recommend you do so. If you identify that you have underpaid staff, you should deal with it as a matter of priority and seek advice on next steps from your professional advisors i.e. your accountant and a lawyer such as TLB Law & Co, if necessary. If you’re unsure whether your systems are compliant, consider a payroll compliance review for your business.
If you are aware that you are underpaying your staff, you should get your house in order immediately.
For small businesses, the Fair Work Ombudsman provides an Employer Advisory Service to small business. Read about it here.
Worried about your payroll obligations? Contact TLB Law & Co to find out how we can assist you with your employment law and payroll compliance. Call 1300 80 67 80 or contact us through our page.