The Fair Work Ombudsman’s (FWO) 2023-24 Annual Report brings some important insights into payroll compliance across Australian workplaces
Over the last year, the FWO recovered $473 million for nearly 160,000 underpaid workers, marking it the third-highest annual recovery in history. These recoveries bring the total amount returned to workers over the last three years to $1.5 billion, showcasing the critical role payroll audit compliance plays in Australian business.
A record year for Fair Work Ombudsman penalties
The 2023-24 period saw the FWO secure $21.2 million in court-ordered penalties, the largest in its 15-year history. A significant portion of these payroll compliance penalties came from large corporate employers. The Commonwealth Bank of Australia and its subsidiary CommSec were among the major offenders, facing combined fines of $10.3 million for underpaying more than 7,400 employees. Other notable cases included over $4 million in penalties against Din Tai Fung restaurant and over $1.4 million against the franchisor of the 85 Degrees brand.
These outcomes send a strong message: businesses must prioritise payroll accuracy and compliance with Australian law. Since July 2020, the corporate sector alone has back paid $877 million to underpaid employees, highlighting the importance of robust payroll systems to prevent wage theft and non-compliance.
Protecting vulnerable workers
The FWO’s focus remains on protecting vulnerable and migrant workers, who are often overrepresented in underpayment cases. Of the total penalties in 2023-24, nearly $8 million related to payroll discrepancies and wage underpayments affecting migrant workers and visa holders. The Din Tai Fung case is one example of how vulnerable workers are disproportionately impacted by payroll errors, with many struggling to assert their workplace rights.
In 2023-24, more than 4,000 anonymous reports were made by migrant workers; accounting for nearly a quarter of all reports received by the FWO. The regulator continues to remind these workers that they have the same workplace rights as any other employee in Australia, and that payroll errors should not go unaddressed.
Enforceable undertakings and compliance notices
In addition to court penalties, the FWO entered into 15 enforceable undertakings with businesses in 2023-24, leading to $30.2 million in back-payments for employees. These agreements require businesses to address payroll software compliance issues and implement safeguards to prevent future underpayments. Big names like Best & Less, Starbucks Coffee Australia, and Optus were among those involved in enforceable undertakings, highlighting the widespread nature of payroll compliance challenges.
The FWO also issued 2,574 compliance notices, recovering $16.9 million in unpaid wages. These notices serve as an essential tool for ensuring businesses address payroll discrepancies and underpayments without the need for prolonged legal action.
Supporting small businesses with payroll compliance
While large corporations often make headlines, the FWO remains committed to supporting small businesses with their payroll audit compliance. In 2023-24, more than 3,000 small businesses received tailored advice on pay and entitlements from the FWO’s Employer Advisory Service, an 8% increase from the previous year. The FWO’s online resources also saw over 200,000 visits from small business owners seeking guidance on payroll systems and employee wage compliance.
Looking ahead: payroll compliance and beyond
The FWO has made it clear that payroll compliance will remain a top priority in 2024-25. The agency is targeting high-risk sectors, such as aged care, agriculture, construction, disability support services, fast food, and universities. Protecting vulnerable workers and supporting small businesses will also continue to be at the forefront of its efforts.
The message is clear: businesses need to take proactive steps to ensure their payroll systems are up-to-date and compliant with Australian law. The risks of non-compliance; whether reputational damage, financial penalties, or employee exploitation; are too significant to ignore.
For more details, you can read the Fair Work Ombudsman’s full media release here.
