Salaried employee underpayments are no longer acceptable under the Fair Work Act
Inzenius has opened its FWO award setup for the 2025/26 rate. Award Interpreter, which you can test your compliance on this website. https://inzenius.com/
Two Case Studies of Underpayment of Salaried Employees
The Coles and Woolworths cases highlight the potential impact of failing to pay your salaried staff as required by current legislation.
- The Issue: Salaried store managers and department managers were paid annual salaries, but these did not cover the actual overtime and penalty rates owed under the General Retail Industry Award 2010.
- “Set-off” Ruling: The Federal Court ruled in September 2025 that supermarkets cannot use “set-off” clauses (averaging high pay over a year to cover overtime) to negate entitlements in individual pay periods.
Repayments and Liability of Underpaying Salaried Employees
- Woolworths: Had already repaid over $300 million to employees, with more coming.
- Coles: Had made remediation payments of over $281 million by April 2026, but faces a significantly higher total liability from the ongoing court action.
- Total Cost: The total bill is expected to exceed $1 billion when combining ongoing class action penalties, interest, and unpaid entitlements such as superannuation and leave amounts attributable to the underpayments found so far.
The Requirement of Underpaying Salaried Employees
Salaried employees earning less than are required to be BOOT tested to ensure their pay passes the Better Off Overall Boot (BOOT) https://www.fwc.gov.au/better-off-overall-test
As of May 2026, the key threshold for salaried employees is the High Income Threshold, which from 1 July 2025 to 30 June 2026 is $183,100 per annum.
As of January 1, 2025, in Australia, intentional wage theft is a criminal offence under the Fair Work Act 2009. Penalties include up to 10 years in prison for individuals and fines up to $8.25 million for corporations, or three times the underpaid amount. This applies to deliberate underpayments of wages, superannuation, and entitlements.
Key Penalties for Criminal Wage Theft (From 1 January 2025)
- Individuals (Managers/Directors): Up to 10 years imprisonment and/or fines up to \(\$1,650,000\) (5,000 penalty units) or 3 times the underpayment.
- Companies (Body Corporate): Fines up to $8,250,000\) (25,000 penalty units) or 3 times the underpayment, whichever is greater.
Inzenius offers the Opportunity to test your business’s salary compliance with the Inzenius FWO 2025/26 rate in its well-tested Award Interpreter
The information added will give you a confidential assessment of what the employee would have received if on the selected pay classification. No data will be retained by Inzenius
Go to this site: https://inzenius.com/
How to Use the System
Email: bootest@inzenius.com if you need help
Inzenius Award Interpreter automates the payroll process using the authorised timesheet
With integration to the business’s HRM and Finance platforms, the process is an all-in-one, out-of-the-box, complete system.
