Underpayment Risks Are Real; Don’t Wait Until It’s Too Late
Underpayment Risks Are Real; Don’t Wait Until It’s Too Late
Many small business owners never imagine they’d end up underpaying their staff. But even with the best intentions, complex awards, changing legislation, and poor record keeping can quickly lead to costly mistakes.
The Fair Work Ombudsman (FWO) recently released its Payroll Remediation Program Guide (April 2025) — a 40+ page document designed to help businesses who discover they’ve made payroll errors and now need to clean things up. It’s detailed, comprehensive… and a little overwhelming.
The guide is clear about what happens next:
- Employers must take employee-centred action to fix things
- You need to consult, document, communicate, and calculate backpay accurately
- You’re expected to pay interest on underpayments — and even trace and pay former staff
- Poor assumptions or inadequate data won’t cut it — the FWO expects proper systems and professional advice
These aren’t just big-business issues. Even small businesses are getting caught out.
“The guide makes it clear: if you’ve underpaid staff, it’s your responsibility to fix it quickly, fairly, and in full — even if it wasn’t intentional.” (Fair Work Ombudsman, 2025)
A Quick Win: Get Ahead with a Free HR Health Check
One of our clients at HR Excellence Partners recently reached out for help on a small HR project. They didn’t think it would lead to anything major but through that work, we uncovered several process gaps that could have escalated into serious compliance issues down the track.
They were glad they caught it early. You can be too.
We help SMEs identify and fix issues before they snowball. Whether it’s payroll compliance, award interpretation, record keeping, or onboarding processes, it’s better to get ahead of it, not react after it’s already a problem.
Access the Fair Work document
Fair Work Ombudsman. (2025). Payroll Remediation Program Guide (April 2025). Commonwealth of Australia. Retrieved from https://www.fairwork.gov.au
