Can you afford to back-pay millions of dollars to underpaid staff?
- WorkPlacePLUS
- Oct 30, 2023
- 4 min read
Updated: Mar 25
It is important to keep track of your employer obligations and ensure that you are paying your staff their correct entitlements.
For example, when changes are made to Modern Awards, it's important to ensure that you update your payroll systems and mitigate the risk of a breach under the Award.
Employers also need to be aware that when wages are increased, allowances need to be increased accordingly. Failing to pay the correct allowances will effectively result in the unlawful underpaying of staff.
An Enforceable Undertaking is a written agreement between the Fair Work Ombudsman (FWO) and an employer who hasn’t complied with their legal responsibilities under Australian Employment Regulations. Enforceable Undertakings are used by the FWO instead of taking the employer to court over non-compliance, such as not paying employees in accordance with their Enterprise Agreement. The employer needs to agree to back-pay employees for wages not paid and be audited for future compliance.
Recent examples in the healthcare, social services, not-for-profit and education sectors:
▶︎ March 2025 - La Trobe University will complete more than $10.77 million in payments, including superannuation and interest, to more than 6,700 underpaid staff as part of entering into an Enforceable Undertaking with the FWO. Learn more >
▶︎ February 2025 - Relationships Australia Queensland has back-paid 980 staff more than $5.6 million, including superannuation and interest, and signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ December 2024 - The University of Sydney will complete more than $23 million in payments, including superannuation and interest, to more than 14,000 underpaid staff as part of entering into an Enforceable Undertaking with the FWO. Learn more >
▶︎ December 2024 - The University of Melbourne will complete $72 million in payments, including superannuation and interest, to more than 25,000 underpaid staff as part of entering into an Enforceable Undertaking with the FWO. Learn more >
▶︎ June 2024 - Not-for-profit charity World Vision Australia Pty Ltd has back-paid staff more than $6 million, including interest and superannuation, and has signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ June 2024 - The FWO has commenced legal action for a second time against the sole trader operator of Kreating Real Change Disability Services in NSW for failing to comply with a Compliance Notice after underpaying worker entitlements under the SCHADS Award and NES. Learn more >
▶︎ May 2024 - Disability support charity Open Minds Australia Limited has back-paid staff about $4.2 million after breaching its own collective agreement and has signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ December 2023 - Hospital and aged care businesses operated by St Vincent’s Health Australia Ltd are back-paying staff in NSW and Queensland more than $4.4 million and have signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ October 2023 - Aged care services provider Calvary Administration Pty Ltd have back-paid staff in Victoria, New South Wales, South Australia and Tasmaniamore than $2.1 million, including interest and superannuation, and have signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ October 2023 - Disability support services provider Aruma Services Ltd has back-paid staff in Victoria more than $6.5 million, including interest and superannuation, and have signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ October 2023 - Disability support services company Community Health, Emergency Care and Support (CHECS) Pty Ltd was penalised $27,000 by the FWO for failing to comply with a Compliance Notice requiring it to back-pay entitlements to a casual employee. Learn more >
▶︎ September 2023 - Aged care services provider Southern Cross Care (Tasmania) Inc, is back-paying staff almost $6.9 million and have signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ July 2023 - Health care provider Apollo Health Limited has back-paid staff in Western Australia more than $4.86 million, including interest and superannuation, and have signed an Enforceable Undertaking with the FWO. Learn more >
▶︎ June 2023 - Home care and disability services provider Community Health, Emergency Care and Support (CHECS) Pty Ltd in South-East Queensland faces a penalty of up to $33,300. Learn more >
The FWO recovered $473 million for nearly 160,000 underpaid workers in 2023-24, taking back-payments to workers to $1.5 billion across the last three years. The recoveries came in a year where the FWO secured the largest penalties in its 15-year history, with the regulator’s litigations leading to $21.2 million in court-ordered penalties.
The $473 million recovered for workers across Australia, detailed in the FWO's 2023-24 Annual Report, is the third-highest annual figure recorded.
According to the 2023-2024 Annual Report, the FWO entered into 15 Enforceable Undertakings with businesses, which included a total of $30.2 million back-paid to employees and improvements to prevent future compliance issues within these businesses. Most of these Enforceable Undertakings involved back-payments of millions of dollars each from some of Australia’s best known employers.
The FWO also issued 2,574 Compliance Notices, recovering $16.9 million in unpaid wages.
Fair Work Inspectors issued 760 Infringement Notices for record-keeping or pay slip breaches, with total fines of $986,616 – an increase from 626 Infringement Notices in 2022-23 and $739,966 in fines paid.
To mitigate the risk of underpaying staff, employers should regularly review their enterprise agreements and the relevant Modern Awards to ensure that all mandatory payments, including hourly rates, overtime, penalties and allowances, are being paid correctly. In addition, make sure you are using valid, well-drafted employment agreements.
For industrial relations support and practical assistance with workplace compliance, enterprise bargaining and business risk mitigation, please contact us today.