If you employ staff, the Fair Work Ombudsman may not wait for a complaint before it takes a look at your pay practices. A bookkeeper's column published on 5 October reports that the regulator recovered more than $453 million in unpaid wages and entitlements for over 181,000 workers in 2025-26, up 27 per cent on the year before. Proactive investigations rose 86 per cent to more than 2,680.

Why it matters for small business

The same column notes that since 1 January 2025, intentionally underpaying wages has been a criminal offence under the Closing Loopholes changes. The article says the heaviest penalties are aimed at deliberate conduct. Accidental underpayment is still a civil breach, and directors and managers involved in a breach can be held personally liable.

Most small employers are not deliberately short changing anyone. The risk is usually a payroll setting that was right two years ago and has quietly drifted out of date.

A 30 minute payroll self-check

  • Confirm each award. Use the Fair Work Pay and Conditions Tool to check that every employee is on the right award and classification.
  • Test a few payslips. Pick one full time, one part time and one casual employee, then check base rate, penalty rates, overtime and allowances against the Pay Calculator.
  • Check your software mapping. Make sure your rostering or timesheet data flows into the correct pay items.
  • Check your records. Keep accurate time and pay records and issue compliant payslips.
  • Fix problems early. If you find an underpayment, correct it promptly and be open with the employee.

The Fair Work Ombudsman also publishes a guide to self auditing your business, which walks through these checks.

Free help if you have fewer than 15 employees

The Employer Advisory Service is a free service for eligible small businesses with fewer than 15 employees. You can get written advice on pay and entitlements. According to the Department of Employment and Workplace Relations, if you follow that advice in good faith and it turns out to be wrong, the Ombudsman will not seek penalties. You would still need to pay any entitlements owed, and an employee or another party can still take their own action.

What to do this week

  • Block out half an hour and run the self-check above.
  • If something looks unclear, ask your accountant or bookkeeper, or lodge an enquiry with the Employer Advisory Service.
  • Ask your payroll provider whether your award rates were updated after the 1 July wage increase.

A short check now is far cheaper than back pay, penalties and a stressful investigation later.