Fair Work Ombudsman 2025–26: Record recoveries, more proactive enforcement, and a clear message for employers

The Fair Work Ombudsman (FWO) has released its 2025–26 Annual Report. It shows a regulator recovering more money for workers, starting far more investigations on its own initiative, and putting tighter governance expectations on employers of every size.

In the 2025–26 financial year, more than 181,000 workers received a total of $453 million in back-paid wages. This was about $95 million more than the previous financial year – a 27% increase. Across the past six financial years, the FWO reports that total back-payments to Australian workers reached close to $2.5 billion.

The regulator also used its full range of enforcement tools:

• Enforceable Undertakings: The FWO signed 15 Enforceable Undertakings (EUs). Each employer committed to better practices and governance as well as full back-payment of staff, and together they back-paid $106.6 million in wages and entitlements, including superannuation and interest.
• Litigation:The FWO commenced 60 litigations and secured $2.3 million in penalties.
• Compliance Notices:The FWO issued 1,392 Compliance Notices, recovering more than $33 million for more than 17,000 workers.
• Infringement Notices:The FWO issued 791 Infringement Notices across all sectors, totaling $831,891 in fines, as a warning to employers to get payslips and record-keeping in order.

The FWO is actively identifying problems rather than waiting for complaints. In 2025–26, its proactive investigations increased by 86 per cent to more than 2,680, almost double the over 1,400 investigations in 2024–25. Recoveries from proactive investigations rose to over $45 million for 13,803 workers.

Workers are also reporting more. The FWO received a record 31,596 anonymous reports, 23 per cent more than the 25,608 received in 2024–25. Fair Work Ombudsman, Anna Booth, said the reports help the regulator spot emerging issues and patterns, and target its education, engagement and compliance work where it is needed most.

The report describes a “strategic enforcement” model. It treats non-compliance as a continuum, from honest mistakes through to deliberate, serious and systemic misconduct, and calls for a proportionate response that combines education, advice, dispute assistance, investigation and enforcement as the circumstances require.

For the most serious cases there is now a new tool. Since the criminal underpayment offence commenced on 1 January 2025, the FWO’s criminal investigations function has assessed 50 matters involving suspected criminal conduct.

The FWO’s 2025–26 priority sectors were aged care, agriculture, building and construction, disability support services, fast food, restaurants and cafés, large corporates, and universities. 

Some highlights:

• Large Corporates: Large corporates accounted for $217.3 million of the year’s back-payments, paid to more than 110,000 workers. The FWO completed 1,161 matters involving large corporates: 1,051 disputes, 73 proactive matters and 37 self-reports.
• Disability support services: The FWO completed more than 1,000 disputes and recovered nearly $24 million for 10,546 workers. Its inquiry into the sector, which began in July 2025, is still under way.
• Aged Care:Two EUs signed with major aged care providers recovered more than $16 million in underpayments that had built up over many years.
• Fast food, restaurants and cafes: The FWO recovered more than $5.6 million for 3,538 workers and started 16 litigations, about 27 per cent of all litigations started in the year.
• Building and Construction: Recoveries exceeded $6.8 million for 932 workers, with nearly 3,000 matters completed and 14 litigations started.
• Universities: The University of New South Wales was penalised $213,120 over systemic record-keeping and payslip contraventions that hindered the FWO’s underpayment investigation. The university later also signed an EU.

The FWO stresses that building a culture of compliance is shared ground for employers and workers. It helped resolve more than 19,000 workplace disputes during the year. The report also raises a new caution about AI: the FWO updated its website to warn that AI-generated information may be outdated, incomplete or inaccurate, and may not match advice from trusted, professional sources.

1. Don’t wait for a complaint. Proactive investigations nearly doubled, so the FWO may find a problem before anyone reports it. Audit pay against awards, agreements and the National Employment Standards at least once a year.

2. Get records and payslips right. Infringement notices and the UNSW penalty show that poor records are penalised, even before any underpayment is proven.

3. Treat payroll as a governance issue. Every enforceable undertaking required better practices and governance as well as back-pay. Boards and executives should get regular payroll compliance reporting in place.

4. Self-report and fix problems early. The FWO expects large corporates to put compliance first and to come forward when they get it wrong. Coming forward and fixing an issue quickly puts an employer in a much better position than being found out.

5. Know the criminal risk. Intentional underpayment is now a criminal offence. Make sure no one in the business could be seen as knowingly underpaying.

6. Build internal speak-up channels. Anonymous tip-offs to the FWO hit a record. If staff can raise pay concerns safely inside the business, problems can be fixed before they reach the regulator.

7. Check your sector exposure. Aged care, disability support, hospitality, construction, agriculture, universities and large corporates face the closest scrutiny.

8. Look across your supply chain. New strategies on labour hire and sham contracting, plus joint work with the Border Force and the ATO, mean employers are expected to know how their contractors and labour hire providers treat workers.

9. Don’t rely on AI for workplace law advice. Check AI-generated answers against the FWO’s own resources or professional advice.

10. Use the free help. Small businesses can get free written advice from the FWO’s Employer Advisory Service.

If you have concerns regarding payroll compliance, record keeping or have any questions about the FWC’s annual report, please contact us here and one of Workplace Strategists will be in touch within 24 hours.