By Louise Missen | Head of Member Services, Australian Payroll Association
Wage theft stopped being someone else's problem on 1 January 2025. That's the day intentionally underpaying an employee's wages or entitlements became a criminal offence in Australia, carrying fines and for individuals, potential prison time. It's no longer a story that only happens to a big retailer or a celebrity chef's restaurant chain. It's a live risk sitting inside every pay run.
By the numbers, i n 2024–25, the Fair Work Ombudsman recovered $358 million for more than 249,000 underpaid workers, on top of $2 billion clawed back over the previous five years. Court penalties hit a record $23.7 million for the year, including a single $15.3 million penalty against one operator.
It's important to note that the criminal offence applies only to intentional underpayment, genuine errors are not captured. This distinction is precisely why robust controls matter. An organisation that can demonstrate an error was identified and corrected through a proper process, rather than left unaddressed, is in a materially stronger position. Sound controls are not simply good practice. They are evidence.
Seven controls account for most of this risk. None are complex to implement. They are, however, the ones most often set aside under operational pressure, which is precisely when they are needed most.
1. Lock in classification before day one
Most underpayments trace back to one root cause, someone was mapped to the wrong award, the wrong classification level, or the wrong employment type, and nobody caught it. It's rarely malicious, usually a job title that doesn't cleanly match an award classification, or a manager completing onboarding without payroll oversight.
The fix: no new starter goes live without confirming award coverage and classification against actual duties. And when duties change, that check runs again.
2. Treat every award update like a mini project
Modern awards move constantly, annual wage reviews, Fair Work Commission variations, CPI-linked allowance changes, super guarantee increases. Each one is a date your pay rules need to update correctly, and each one is a chance to underpay if it doesn't.
The fix: Build a documented process, who monitors changes, who configures them, who tests before go-live, who signs off and who backdates if needed.
3. Reconcile the data before you trust it
Rosters, timesheets and the actual pay run are often three different sources of truth and underpayment lives in the gaps between them. Unpaid overtime from a rounded-down timesheet. A missed break penalty because the roster and the clock-in disagreed.
The fix: Reconcile what was rostered against what was worked against what's about to be paid, before the money goes out. Catch it before payday and nothing happens. Catch it after, and you're into back-pay and awkward conversations.
4. Never let one person hold the whole pay run
Straight out of the financial controls playbook, if the person keying in changes is also the only person reviewing and releasing the run, errors and deliberate manipulation have nowhere to be caught.
The fix: A second set of eyes on exceptions and manual adjustments before release is one of the cheapest controls available, and one regulator specifically looks for.
An error that's caught, disclosed and fixed quickly looks nothing like an error that was known about and left alone. Under the current law, that's not just reputational, it's the line the criminal offence is actually drawn on.
5. Make sure Payday Super is actually working, not just switched on
Payday Super commenced on 1 July 2026, and super now has to reach an employee's fund within seven business days of payday (twenty for a new starter's first payment), a sharp compression from the old quarterly cycle. For some employers, the switch-over was rougher than expected. The final quarterly payment for April–June was still due on 28 July, landing right on top of the first round of new payday obligations and squeezing cash flow at exactly the wrong moment. The stakes for getting it wrong are also sharper now. The ATO's general interest charge on unpaid super is currently running at 11.43% per annum and hasn't been tax-deductible since 1 July 2025.
The fix: don't just confirm the contribution left payroll on time, confirm it landed. Assign someone to check your clearing house's rejection report every pay cycle. Rejected payments are common straight after a system change like this and an unactioned rejection is exactly how a technical hiccup turns into an underpayment.
6. Audit yourselves before Fair Work does it for you
Waiting for a complaint or an FWO notice is the most expensive way to discover an underpayment. A periodic self-audit, sampling pay runs, checking classifications, testing that system configuration still matches current award terms, lets you find and fix problems on your own terms, and demonstrates exactly the kind of good-faith process the criminal offence hinges on.
The fix: put a self-audit on the calendar, quarterly is reasonable, with a named owner and a simple checklist, not a "we'll get to it eventually" review.
7. Make raising a mistake the easy option
Anonymous reports to the Fair Work Ombudsman rose 50% last financial year. People are increasingly willing to escalate when they don't feel heard internally. A clear, non-punitive process for staff to flag a suspected error, a documented correction procedure, and prompt back-payment when something's found that's the culture that keeps a mistake a mistake.
The fix: give staff one clear, known channel to flag a suspected error, and commit to acting on it, investigating, correcting, back-pay, within a set period.
None of these seven controls is complicated on their own. What they share is that they only work if someone owns them and keeps revisiting them as awards, systems and legislation move and in Australian payroll, they never stop moving.
We see this play out across our membership every year. The organisations that treat these seven controls as standing practice, not a once-off project, are consistently the ones that catch an error before it becomes a headline. Strengthening payroll controls isn't just good governance, it's how the profession protects the people it exists to pay correctly.
