Payroll & HR and upstream managers face personal direct liability for knowingly or should have known of systemic underpayment of wages for their employees.
Did you know that employees’ time boundaries and weekly workdays need to be included in their employment contracts? Can they only be varied by their recoded documented acceptance? This is, along with the need for timekeeping /timesheet records of the agreed days and hours they worked for the business to be able to undertake the required pay audits, Better Off Overall Test (BOOT), and employment contracts, defines work times.
Employees’ hours based on employee type,
With full-time staff typically working 38 ordinary hours per week, often structured as 7.6-hour days. Part-time employees have guaranteed regular, fewer hours, while casuals have no guaranteed hours. Contracts may outline specific rosters, “reasonable” overtime, or a “spread of hours” (e.g., 7 am – 7 pm) during which work occurs.
In many awards, working outside agreed work times may incur penalty rates and increase the risk of failing the BOOT test.
Fairwork “Outer limits” in modern awards
Are specific, regulated caps on the number of overtime or penalty-rate hours an employee can work while on an annualised wage arrangement. If an employee works beyond these set hours, the employer must make an additional payment to the employee, regardless of the annualised salary.
In our investigations, many businesses are being caught out with systemic underpayments of wages and benefits.
Systemic Errors and omissions to pay
Refers to something that affects or relates to an entire system, organization, or body, rather than just isolated, local parts. It implies that a problem, change, or condition is deeply rooted within the structure of the whole.
The liability is being recognised as personal direct or accessorial liability by the courts and Fairwork
Accessorial liability
Holds individuals or entities (such as directors, HR managers, or advisors) personally responsible for a company’s legal breaches if they are knowingly involved. Under Australian law, accessories can face the same penalties as the primary wrongdoer, including fines and compensation orders.
The financial penalties,
In addition to reputational damage, penalties can be substantial, as recorded on the Fairwork website.
As of January 1, 2025, intentional (Systemic) underpayment of employees is a criminal offence in Australia, carrying penalties of up to 10 years in prison and fines of up to $8.25 million for companies or $1.65 million for individuals. Civil penalties for non-intentional breaches also increased significantly, reaching up to $495,000 per breach for larger companies
Don’t take the risk of such penalties by not investigating systemic underpayments of wages; it is management’s responsibility
Inzenius is here to help with the initial identification of salaried employees’ wages compared to what they would have received if on the award call the Better-Off-Overall-Test (BOOT)
The Better Off Overall Test (BOOT)
Is a mandatory assessment by the Fair Work Commission (FWC) ensuring enterprise agreements provide employees with better pay and conditions than the relevant modern award. It requires a “global” assessment, rather than a line-by-line comparison, to confirm all covered employees are better off.
At the moment, this condition is being added to awards for calculation on a pay-by-pay period rather than the initial negotiated or annual reviews
Inzenius is here to help
Connect with www.inzenius.com to take a confidential sample of salaried employees’ times worked, awards, conditions, and pay requirements to help you being Better Off Overall
LinkedIn Article Extract
April 2026 has delivered a wave of important developments for employers, payroll teams and HR leaders.
With new court decisions, active enforcement from regulators, and major legislative changes approaching, this month’s update highlights the issues that matter most right now.
- HR Professionals Face Personal Liability Risks
Case: Sha v Snap Innovations Pte Ltd (23 April 2026) A key April ruling confirmed that HR officers can be held personally liable for involvement in payroll‑related processes, including issuing termination notices. The court found the HR officer’s involvement sufficient for potential accessorial liability under the Fair Work Act.
Why it matters:
- HR and payroll staff may be named personally in claims
- Delegations and approval workflows should be reviewed
- Training on termination and award compliance is essential
- $140,000 Penalty for Withheld Wages & Superannuation
Case: Lambert v Arria NLG (Aus) Pty Ltd (No 2) (23 April 2026) The employer was penalised after withholding wages for more than a year and failing to pay superannuation since 2023. The court viewed the conduct as deliberate and aggravated by ignoring earlier orders.
Key takeaway: Non‑payment of wages or super is treated as serious misconduct, and penalties escalate quickly when employers fail to rectify issues.
- FWO April Focus: Break Compliance & Time‑Recording Integrity
- 10‑Minute Break Compliance Under the Microscope
The FWO has emphasised that missed or shortened rest breaks — including the common 10‑minute paid rest break — are breaches of the Fair Work Act, not operational inconveniences.
Recent audits show:
- Breaks skipped due to understaffing
- Rosters not allowing compliant spacing
- No records of break compliance
Risk: Penalties apply per employee, per breach.
- Falsifying or Editing Work Hours = Serious Contravention
The FWO has reiterated that altering or deleting timesheets — even to “fix errors” — is a serious contravention.
Common issues include:
- Removing overtime
- Rounding down hours
- Auto‑adjusting clock‑in/clock‑out times without audit trails
Action: Strengthen time‑recording controls and require employee sign‑off for any adjustments.
- Additional April 2026 Compliance Issues
- SMEs Remain High‑Risk for Underpayments
April audits show recurring issues in small and medium businesses:
- Misclassification of employee levels
- Incorrect penalty rates
- Missing allowances
- Failure to meet minimum engagement periods
- Annualised Salary Reconciliations Due by 30 June
April is the ideal time to begin reconciliation work. Common errors include:
- Not comparing actual hours vs salary coverage
- Missing allowances
- Failing to capture unpaid breaks or overtime
- Psychosocial Hazard Claims Rising
April WHS data shows increase in claims linked to:
- Workload pressure
- Inadequate breaks
- Excessive hours
- Poor rostering practices
- ATO Flags STP Phase 2 Reporting Errors
April guidance highlights common issues:
- Incorrect disaggregation of gross
- Misreported leave categories
- Incorrect allowance codes
- Duplicate employee records
- Visa Worker Compliance Crackdown
Joint FWO and Home Affairs audits in April identified:
- Missing timesheets
- Cash‑in‑hand arrangements
- Underpayment of penalty rates
- Failure to issue payslips within 1 working day
- NSW Government’s Mental‑Health Crackdown (April 2026)
The NSW Government has intensified enforcement around psychosocial hazards, following a rise in stress‑related claims and several high‑profile investigations.
Regulators are focusing on:
- Workload pressure
- Fatigue and excessive hours
- Understaffing
- Poor rostering practices
- Inadequate breaks
Why it matters:
Psychosocial hazards are now enforceable under WHS laws, and April saw a clear increase in improvement notices and investigations.
- Unions Gain Power to Review AI‑Generated Workloads (April 2026)
April 2026 saw unions actively exercising new rights to scrutinise AI‑driven rostering and workload allocation systems.
Unions can now request information about:
- How AI allocates shifts or tasks
- Whether automated systems increase workload risks
- Impacts on fatigue, break compliance, or unsafe hours
This is particularly relevant in industries using:
- AI‑based rostering
- Algorithmic task assignment
- Predictive scheduling
- Automated performance monitoring
Why it matters:
AI‑generated workloads can unintentionally breach awards, WHS laws, or break entitlements — and unions are now empowered to intervene.
- Legislative Update: Payday Super Starts 1 July 2026
The shift to real‑time superannuation is approaching fast.
Key changes:
- Super must be paid on payday
- Contributions must reach funds within 7 business days
- The ATO’s Small Business Superannuation Clearing House will close
- Introduction of qualifying earnings as the new SG base
- Gender Equality Target‑Setting (April–May 2026)
Employers with 500+ employees must select three gender‑equality targets when lodging their WGEA report between 1 April and 31 May.
- WHS Enforcement Expansion Active in April
NSW unions now have the power to initiate civil penalty proceedings for WHS breaches, increasing litigation risk — particularly around psychosocial hazards.
What Employers Should Prioritise in April 2026
- Audit break compliance, especially 10‑minute rest breaks
- Strengthen time‑recording integrity
- Prepare payroll systems for Payday Super
- Review HR/payroll delegations
- Complete WGEA target selection
- Begin annualised salary reconciliations
- Check STP Phase 2 mapping
- Ensure visa‑worker record‑keeping is compliant
- Update psychosocial hazard controls
- Review AI‑driven rostering/workload systems for compliance