
The Fair Work Ombudsman’s record recoveries: Lessons and implications for employers
The Fair Work Ombudsman (FWO) has announced that it has recovered an extraordinary $473 million in back payments during the 2023-2024 financial year. This figure represents the third-highest annual recovery total on record and highlights the FWO’s greater focus on changing the employment landscape. These efforts seek to improve the compliance and accountability of businesses in paying their workers correctly.
Over half of the recovered payments came from large corporate sector employers, signalling a trend of compliance issues now facing Australia’s biggest businesses. Since July 2020, $877 million in wages have been collectively repaid. These figures illustrate that the ongoing issue of wage underpayment and the learning curve businesses are facing as they adjust to the challenges, they face in managing and navigating the new changes to legislation.
Record enforcement actions and recoveries
The FWO’s efforts in 2023-2024 included filing 64 new litigations and entering into 15 Enforceable Undertakings (EUs) with businesses. These EUs alone accounted for $30.2 million in back-paid wages to employees and mandated significant improvements in workplace compliance systems.
Additionally, Fair Work Inspectors issued 2,574 Compliance Notices, recovering $16.9 million in unpaid wages. Inspectors also issued 760 Infringement Notices for record-keeping or pay slip breaches, resulting in total fines of $986,616. This marks an increase from the 626 Infringement Notices and $739,966 in fines issued in 2022-23, further demonstrating the challenges businesses are facing in adjusting to this new legislative space.
A focus on accountability and closing loopholes
The FWO’s efforts align with legislative changes aimed at curbing wage underpayment. On January 1, 2025, significant provisions of the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 came into effect.
A central feature of the amendments is the criminalisation of intentional underpayment of wages, a move that increases the risks for employers who fail to comply with the new regulations. The changes reflect a growing push for businesses to prioritise compliance and reframe how they view wage theft.

Understanding how wage underpayment comes about
Underpayments often arise from a combination of factors, including:
- Complex Awards and Agreements: Australia’s intricate and often complex system of awards, enterprise agreements, and the National Employment Standards (NES) can be difficult for employers to navigate. Misinterpretations or administrative errors can lead to non-compliance.
- Inadequate Payroll Systems: Many companies rely on outdated payroll systems or manual processes that increase the likelihood of mistakes in wage calculations and may struggle to keep up with the needs imposed by these legislative changes.
- Systemic Oversights in Large Corporations: Large businesses often face challenges managing compliance across multiple divisions or locations, leading to gaps in oversight.
- Cost-Saving Motivations: In some cases, employers deliberately underpay workers to reduce labor costs, a prospect that now faces increased scrutiny and legal risk.
Implications for employers
The substantial recovery figures and recent legislative changes send a clear message that non-compliance can be as reputationally damaging as it is financially costly.
Employers can expect:
- Greater Enforcement Actions: The FWO’s proactive investigations and audits will likely continue, particularly targeting those we have seen most heavily impacted, such as large employers in high-risk sectors.
- Criminal Consequences: With intentional underpayment criminalised, both businesses and their executives and directors may face personal liability for breaches. Criminal liability now also extends to individuals or companies where their conduct relates to an offense, such as aiding an employer in committing an offence. Where a person or business is found guilty punishments may including hefty fines, with Australian bosses facing potentially up to 10 years jail time or $1.65 million fines.
- Reputational Risks: Public scrutiny of wage theft cases can erode consumer trust and employee morale, such as the Woolworth’s 2023 wage theft scandal that saw them underpay workers by $1.24 million.
Preventing wage underpayment
Employers must adopt robust measures to ensure compliance with workplace laws.
Key steps include:
- Conducting Regular Audits: Employers should undertake periodic payroll audits to identify and rectify underpayment issues before they escalate.
- Training and Support for HR and Payroll Staff: Comprehensive training and support to interpret awards and agreements and ensuring this is periodically revisited in line with any further changes is essential to prevent miscalculations.
- Seeking Advice: Consulting with workplace strategists can help businesses navigate complex regulatory requirements and avoid breaches.
- Fostering a Compliance Culture: Leadership should prioritise compliance into organisational values.
- Engaging with FWO Resources: The FWO have published a variety of resources to help businesses navigate the new legislation, such the Voluntary Small Business Wage Compliance Code (Code). This sets out steps that many businesses already follow as part of good businesses practices, for example taking reasonable steps to work out correct pay rates or seeking advice on paying employees correctly.
- Utilise Self-Reporting in Instances of Mistakes: Employers who contravene these new provisions and voluntarily communicate this to the FWO will have the option to engage in a cooperation agreement with the FWO. This means employers will not be referred to criminal prosecution for their conduct.
Looking ahead: A turning point for workplace compliance
The FWO’s focus on holding employers accountable and the introduction of stricter laws mark a turning point for Australian workplace relations. For employers, a shift towards proactive compliance is now paramount. Beyond avoiding legal and financial consequences, prioritising the correct pay of employees fosters organisational loyalty and contributes to a positive business reputation.
As businesses move forward, embracing transparency, investing in compliance, and fostering a culture of fairness will help safeguard them from penalties. The significant recovery figures from 2023-2024 highlight both the scale of the challenge and the opportunity for employers to lead the way in closing the wage theft chapter for good.

Connect with us
If you’d like to learn more or have any questions or concerns, please contact us here and one of our Workplace Strategists will be in touch within 24 hours.