Penalties for systemic failures include:

Penalties for wage theft

The penalties for wage theft are significant, with the following penalties applying:

for a company, a maximum penalty of $7.825 million or 3 times the amount of the underpayment, whichever is greater; and
for an individual, a maximum of 10 years in prison, and a maximum penalty of $1.565 million or 3 times the amount of the underpayment (whichever is greater).

Why Are So Many Australian Enterprises Being Caught Out?

Australia is reported to have the 3rd most complex Award Interpretation regime in the world in 2025.

Most of the errors and omissions are not necessarily due to systemic known issues by the senior management and directors, but rather payroll processing errors caused by many factors requiring off-system workarounds, including these 10 situations :

1. Misclassification of the appropriate award and level of the employee’s award coverage and levels.

2. Non-compliance of employee contracted work days and times across variable shift rosters

3. Non-capture of beak times and the interpretation of the penalties for breaks not recorded or outside of the max time required for a break to be taken

4. Poor rostering development and communications

5. Incorrect allocation of leave days, where during the period the leave included public holidays

6. Added leave calculation where an employee works more than a defined number of weekend days

7. The record keeping of LSL accruals does not reflect the actual OTE times worked across the employees’ 7-year-plus periods.

8. The correct calculation of overtime accrual where it is to be averaged over more than a week and multiple pay periods

9. Calculation of pay at different rates and conditions where the employee works in different roles in the same shift and the same pay run (Multi-Hire)

10. And with a typical award having up to 7,000 conditions and $rates to be paid for them it is no wonder errors and omissions are being made.

Any underpayments and miscalculations can be identified by the employee, the union, or any agent, and the business must report such instances to the Fair Work Ombudsman.

https://www.fairwork.gov.au/employment-conditions/representational-rights-and-responsibilities-in-the-workplace/role-of-unions-and-employer-associations/right-of-entry

This process triggers the need for an audit to be undertaken and given to the Fairwork Ombudsman for their approval of a defined enforceable undertaking.

https://www.fairwork.gov.au/about-us/compliance-and-enforcement/enforceable-undertakings

FWO Enforceable Undertaking published on the FWO web site

Enforceable Undertakings are used to fix a problem and make sure it doesn’t happen again. We can use an EU instead of taking an employer to court. We generally do this where:

an investigation has shown that workplace laws have not been followed
the employer is prepared to voluntarily fix the issue and
they agree to preventative actions for the future.

Typically, an Enforceable Undertaking contains additional obligations. These include:

an acknowledgement by the employer that the law has not been followed
an agreement by the employer to do certain actions to fix the breach (for example, remedying an underpayment, apologising, printing a public notice)
a commitment by the employer to future compliance measures (for example, regular internal audits, training for managers and staff, future reporting to the Fair Work Ombudsman).

The Solution

1. Undertake an analysis of your business’s potential to be caught underpaying salaried employees.

a. You may choose to gain access to the Inzenius Salary BOOT Tester at www.inzenius.com

where you can confidentially test a sample employee’s interpreted timesheet compared to what they are paid. This is called a BOOT Test.

If you need help, contact: bootest@inznius.com

2. Undertake the required update of your payroll system set-up.

a. Inzenius can be engaged to help with this.

3. Undertake a deeper review in preparation to report to Fairwork

It is in the best interest of the enterprise to have a detailed plan to test compliance and to take any further actions required to remedy Payroll Interpretation shortfalls and inefficiency

Inzenius Customer Reference

“At Incognitus, we needed to undertake many payroll workarounds within our ERP system. The support provided was not only timely and efficient but also customer-focused with a detailed understanding of our specific needs” Grant Summers, CFO, Incognitus

The penalties for systemic wage theft are significant, with the following penalties risks:

for a company, a maximum penalty of $7.825 million or 3 times the amount of the underpayment, whichever is greater; and
for an individual, a maximum of 10 years in prison, and a maximum penalty of $1.565 million or 3 times the amount of the underpayment (whichever is greater).

Why Are So Many Australian Enterprises Being Caught Out