Can you afford to back-pay millions of dollars to underpaid staff?
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.
Download the current Pay Guide: SCHADS, Health Professionals, Nurses>
What is an Enforceable Undertaking?
An Enforceable Undertaking is a formal, legally enforceable agreement between the Fair Work Ombudsman (FWO) and an employer that sets out actions the employer will take to address workplace law contraventions and improve future compliance.
An undertaking may include commitments to back-pay affected employees, review payroll systems and processes, engage independent auditors, provide training and implement measures to prevent future non-compliance.
For employers, an Enforceable Undertaking can therefore involve not only significant back-payments, but also ongoing compliance obligations and scrutiny.
Recent examples of Enforceable Undertakings:
▶︎ September 2026 - The University of Queensland has signed an Enforceable Undertaking with the FWO after underpayments of about $11 million, including interest and superannuation, to 16,382 staff. Learn more
▶︎ August 2026 - Peabody Energy Australia, a coal producer that operates black coal mines in Queensland and NSW, has signed an Enforceable Undertaking with the FWO after it rectified nearly $5 million, including superannuation and interest, to 197 underpaid workers. Learn more
▶︎ July 2026 - Disability services provider Yooralla has entered into an Enforceable Undertaking with the FWO after rectifying $2.05 million in underpayments, including interest and superannuation, to more than 1,300 underpaid staff. Learn more
▶︎ July 2026 - The University of NSW will complete more than $32 million in rectification payments, including interest and superannuation, to over 33,000 underpaid staff as part of entering into an Enforceable Undertaking with the FWO. Learn more
▶︎ June 2026 - RSPCA QLD has rectified approximately $4.3 million in underpayments, including interest and superannuation, to 1,008 staff as part of an Enforceable Undertaking with the FWO. Learn more
▶︎June 2026 - The Smith Family has completed payments of more than $5.9 million, including interest and superannuation, for 784 underpaid workers as part of entering into an Enforceable Undertaking with the FWO. Learn more
Fair Work Ombudsman recovers $453 million for underpaid workers
The scale of wage underpayments continues to highlight the importance of proactive payroll and employment compliance.
In 2025–26, the Fair Work Ombudsman (FWO) recovered more than $453 million in unpaid wages and entitlements for more than 181,000 workers. This was an increase of about 27% on the previous year.
The FWO also significantly increased its proactive investigations, conducting more than 2,680 investigations in 2025–26, an increase of 86% on the previous financial year. Recoveries from proactive investigations exceeded $45 million and affected more than 13,800 workers.
The FWO's increased focus on proactive compliance reinforces the importance of employers identifying and addressing payroll risks before they become significant underpayment liabilities.
Aged care underpayments highlight common payroll risks
A recent FWO investigation into 22 aged care businesses provides a clear example of how relatively common payroll errors can accumulate across a large workforce.
The FWO recovered more than $5.3 million for nearly 3,600 direct care employees after finding underpayments at 13 of the 22 providers investigated.
The most common issues included incorrect classification, underpayment of overtime, broken shift entitlements and minimum engagement periods. The FWO also identified record-keeping and payslip breaches.
In one case, a home care provider identified underpayments affecting more than 600 casual employees and back-paid more than $2 million after seeking external advice, conducting a workforce audit and identifying errors dating back to 2023. The provider also updated its payroll system and trained relevant staff to reduce the risk of future non-compliance.
The FWO has since commenced investigations of a further 30 employers in the aged care sector, focusing on compliance for cleaning and catering employees.
Underpayments remain a significant risk across industries
The issue is not limited to aged care.
In 2025–26, the FWO recovered more than $6.8 million for 932 workers in the building and construction sector. Back-payments to workers in the sector have exceeded $23.2 million since November 2022.
In disability support services, the FWO completed more than 1,000 disputes and recovered nearly $24 million for more than 10,500 workers, with the majority of recoveries resulting from proactive compliance activities.
These figures demonstrate why payroll compliance should be treated as an ongoing risk-management issue rather than a once-off exercise.
How can employers reduce the risk of underpayments?
To mitigate the risk of underpaying staff, employers should regularly review their enterprise agreements and relevant Modern Awards to ensure that all mandatory payments, including minimum rates, overtime, penalties and allowances, are being paid correctly.
Employers should also check that employees are correctly classified, payroll and rostering systems reflect current entitlements, and changes to awards and employment legislation are communicated to those responsible for payroll and workforce management.
Regular payroll compliance reviews can help identify errors before they become widespread and expensive to remediate.
For organisations covered by Modern Awards such as the SCHADS Award, Aged Care Award or Health Professionals and Support Services Award, even a small error in classification, rostering or an allowance can have a significant financial impact when applied across a large workforce.
Workplace Plus can help employers identify payroll compliance risks, review award and enterprise agreement requirements and put practical measures in place to reduce the risk of future underpayments.
For support and more information, please contact us today.
