Australia’s biggest staff underpayment cases share a small set of causes: untracked salaried overtime (Woolworths, Coles), weak franchise oversight (7-Eleven, Domino’s), award complexity outgrowing payroll systems (George Calombaris), enterprise-agreement misinterpretation at scale (BHP), and deliberate underpayment concealed by falsified records (Sushi Bay). Together these employers underpaid staff by well over $780 million — proof that even large corporations with dedicated payroll teams get award interpretation wrong.
The stakes have never been higher. From 1 January 2025, intentional wage underpayment is a criminal offence carrying up to 10 years imprisonment for individuals and $8.25 million in fines for companies. The Fair Work Ombudsman has recovered around $1.5 billion in underpayments for workers over the past three years. This article examines Australia’s most significant underpayment cases — from 7-Eleven to the record-breaking Sushi Bay penalties in 2024 — and the lessons every employer should take into 2026. To pay staff correctly on every shift, built-in award interpretation removes the manual maths where most of these errors begin.
Quick summary
- The scale:
Major Australian companies have underpaid workers by hundreds of millions of dollars
- The causes:
Salaried employee overtime, complex award interpretation, weak franchise oversight, and inadequate payroll systems
- The consequences:
Back-payment, penalties, criminal prosecution from 2025, and lasting reputational damage
- The fix:
Automated award interpretation tools help prevent underpayment before it occurs
Criminal wage theft laws from 2025
From 1 January 2025, intentional underpayment of wages became a criminal offence under amendments to the Fair Work Act 2009 (Cth), introduced through the Fair Work Legislation Amendment (Closing Loopholes) Act 2023. This represents the most significant change to Australian workplace law in decades, and it reframes every case below: conduct that once attracted civil penalties can now expose directors and managers to prison.
$8.25 million
Maximum company penalty, or 3× the underpayment amount — whichever is greater
10 years prison
Maximum for individuals, and/or up to $1.65 million or 3× the underpayment
The law provides a safe harbour for small businesses (fewer than 15 employees) that comply with the Voluntary Small Business Wage Compliance Code — the Fair Work Ombudsman won’t refer compliant small businesses for criminal prosecution. Larger employers can avoid criminal liability by self-reporting underpayments to the Fair Work Ombudsman and entering a Cooperation Agreement.
Intention includes recklessness
The criminal offence targets intentional underpayment. However, “intention” extends to recklessness — meaning employers who fail to implement proper compliance systems may still face prosecution if underpayment occurs and they ought reasonably to have known. A good-faith mistake is not a defence if you never built the controls to catch it.
Who is the Fair Work Commission?
Before examining the cases, it helps to understand the regulatory framework. The Fair Work Commission is Australia’s national workplace relations tribunal. Its responsibilities include:
- Setting minimum wages — the Commission conducts the Annual Wage Review and adjusts the national minimum wage.
- Resolving disputes — it helps employers and employees resolve workplace disagreements through conciliation and arbitration.
- Approving agreements — enterprise agreements must be approved by the Commission to take effect.
- Addressing unfair dismissals — employees can apply to the Commission if they believe they were unfairly terminated.
- Education — the Commission provides information about workplace rights and obligations.
The Fair Work Ombudsman is a separate body that investigates complaints, enforces compliance, and can prosecute employers for breaches. Together, these bodies form the regulatory framework that all employers must navigate.
Australia's major underpayment cases
These six landmark cases (plus the record 2024 Sushi Bay penalty) show how underpayment can occur at any scale — and the significant consequences that follow.
7-Eleven (2015) — $44 million back pay
A joint Fairfax Media and Four Corners investigation in 2015 exposed systematic underpayment across 7-Eleven franchises nationwide, with many franchise owners paying workers — often international students on visas — as little as $10 per hour. The scandal exposed a franchise model where head office profited while franchisees cut corners on wages to stay viable. 7-Eleven agreed to $44 million in back pay and major compliance reforms. Key failure: inadequate oversight of franchisee employment practices, with a business model that made compliance economically difficult. Today, purpose-built franchise workforce management software gives head office network-wide visibility and standardised award interpretation across every location.
Woolworths (2018) — $300 million, 5,700 managers, 8 years
Australia’s largest private employer discovered it had underpaid roughly 5,700 salaried store managers by $300 million over eight years, because managers’ salaries did not adequately compensate for the overtime they actually worked. Under Australian law, salaried employees must still receive at least the equivalent of award entitlements — when long hours pushed the effective hourly rate below the award minimum, Woolworths was in breach despite paying seemingly generous salaries. Key failure: salaried hours weren’t tracked against award minimums, so the Better Off Overall Test quietly failed.
Coles (2019) — $20 million, thousands of workers, 6 years
Coles found it had underpaid thousands of workers by about $20 million over six years. As with Woolworths, the issue centred on salaried employees whose effective hourly rates fell below award minimums once actual hours were counted. The case proved that even companies with sophisticated payroll systems can miss fundamental requirements if they don’t track hours for salaried staff. Key failure: the same salaried-employee blind spot as Woolworths — an industry-wide gap in retail management pay structures.
Domino's Pizza (2018) — nearly $8 million
A Fair Work Ombudsman investigation found Domino’s Pizza had underpaid workers by nearly $8 million. Like 7-Eleven, the franchise model made consistent compliance across independently operated stores difficult, and the case led to significant reforms in franchisee oversight and compliance monitoring. Key failure: insufficient franchisor oversight of franchisee payroll, compounded by fast-food penalty-rate complexity and a young workforce.
George Calombaris (2019) — $7.8 million, 162 workers
Celebrity chef George Calombaris admitted to underpaying 162 workers across his Melbourne restaurant group by $7.8 million. The MasterChef judge’s high profile intensified scrutiny and showed how underpayment can destroy personal and business reputations. Despite back-payment and a $200,000 contrition payment, the reputational damage contributed to the group’s eventual collapse. Key failure: hospitality award complexity and rapid expansion without corresponding payroll system upgrades or compliance oversight.
BHP (2023) — $400 million, 30,000 workers, since 2010
Mining giant BHP acknowledged in 2023 that it had underpaid roughly 30,000 workers since 2010, requiring $400 million in remediation — one of the largest wage-remediation exercises in Australian corporate history. It proved that even the largest, best-resourced companies can suffer systemic payroll failures. Key failure: complex enterprise-agreement interpretation across multiple sites and employment types, where systemic errors compounded over years despite dedicated payroll resources.
Sushi Bay (2024) — record Fair Work penalty
In 2024, the Federal Court imposed the highest penalties ever in a Fair Work Ombudsman case against Sushi Bay Pty Ltd and related companies. They were found to have falsified records to conceal the underpayment of workers, with individual underpayments reaching nearly $84,000. The result surpassed the previous record $10.3 million penalty against Commonwealth Bank and CommSec earlier that year. The severity reflects both the deliberate nature of the underpayment and the record falsification — exactly the conduct that now attracts criminal prosecution under the 2025 wage theft laws. Key failure: deliberate underpayment concealed by falsified records — the most serious category of wage theft.
Underpayment summary
Australia's major staff underpayment cases at a glance
| Company | Year | Amount | Workers | Key issue |
|---|---|---|---|---|
| 7-Eleven | 2015 | $44 million | Thousands | Franchise oversight |
| Woolworths | 2018 | $300 million | 5,700 | Salaried overtime |
| Coles | 2019 | $20 million | Thousands | Salaried overtime |
| Domino's Pizza | 2018 | $8 million | Unknown | Franchise compliance |
| George Calombaris | 2019 | $7.8 million | 162 | Award complexity |
| BHP | 2023 | $400 million | 30,000 | EA interpretation |
| Sushi Bay | 2024 | Record penalty | Multiple | Falsified records |
Figures are as publicly reported at the time of each case and are provided for general information only.
Key lessons for Australian employers
These cases reveal common themes that every employer should address:
Track salaried employee hours
Woolworths and Coles both failed because they didn’t verify that salaried managers’ actual hours resulted in at least award-equivalent pay. Track hours even for salaried staff.
Award complexity requires systems
Australian awards are complex and manual calculations create errors. Automated award interpretation prevents mistakes before they become expensive problems. For the specific errors to watch, see our guide to payroll award interpretation mistakes.
Franchise oversight matters
7-Eleven and Domino’s showed that franchisors can’t ignore franchisee employment practices. Head office must actively monitor and support compliance across the network.
Growth requires system upgrades
George Calombaris’s restaurant group outgrew its payroll systems. As businesses expand, compliance infrastructure must scale with them.
Size doesn't guarantee compliance
BHP’s $400 million remediation proves that massive resources don’t prevent systemic errors. Every organisation needs robust compliance processes.
Self-disclosure is safer
Companies that proactively identified and remediated underpayment generally fared better than those caught by investigations. Regular compliance audits are essential.
How to support payroll compliance
The Australian award system is complex — even large corporations with dedicated payroll teams struggle to maintain compliance, and for small and medium businesses the challenge is greater still. The solution is implementing robust systems that automate compliance checks:
1. Use award interpretation software
Award interpretation systems calculate correct pay rates, penalties, overtime, and allowances based on the specific award applying to each employee — eliminating the manual calculation errors that cause underpayment.
2. Track all hours worked
Implement time and attendance for all staff, including salaried employees. This creates the records needed to verify award compliance — the exact control Woolworths and Coles lacked.
3. Conduct regular compliance audits
Review pay rates against current awards, verify salaried calculations, and check entitlements are applied correctly. Use our free tools to assess underpayment risk or estimate back-pay exposure, and follow our guide on how to conduct a payroll audit. Catching issues early prevents years of accumulated underpayment.
4. Stay current with award changes
Awards change annually (usually 1 July). Subscribe to Fair Work updates and confirm your payroll settings reflect current rates — continuing to pay old rates after an increase creates immediate underpayment.
5. Keep comprehensive records
Maintain records for seven years as required by law. Complete records demonstrate compliance if questioned and enable accurate back-payment calculations if issues are discovered.
Related RosterElf features
Protect your business from underpayment risk. RosterElf’s built-in award interpretation ensures you pay staff correctly — every shift, every pay run — with automatic penalty and overtime calculations and clean exports to Xero and MYOB.
Disclaimer
This article provides general information about underpayment cases and compliance practices. It does not constitute legal or financial advice. Always verify current requirements using official Fair Work Ombudsman resources and seek qualified professional advice for specific situations.
Frequently asked questions
What are the criminal penalties for wage theft in Australia from 2025?
From 1 January 2025, intentional wage underpayment is a criminal offence. Companies face maximum penalties of $8.25 million or 3× the underpayment amount (whichever is greater). Individuals face up to 10 years imprisonment and/or $1.65 million or 3× the underpayment. Small businesses complying with the Voluntary Small Business Wage Compliance Code have safe harbour protections.
What is the role of the Fair Work Commission in Australia?
The Fair Work Commission is Australia’s national workplace relations tribunal. It sets and adjusts the national minimum wage, resolves workplace disputes, approves enterprise agreements, addresses unfair dismissals, and educates employers and employees on workplace relations matters. It is separate from the Fair Work Ombudsman, which investigates complaints and enforces compliance.
What was the largest Fair Work Ombudsman penalty in 2024?
The Sushi Bay case in 2024 resulted in the highest penalties ever imposed in a Fair Work Ombudsman case. The companies falsified records to conceal underpayments, with individual workers underpaid by up to $84,000. This surpassed the previous record $10.3 million penalty against Commonwealth Bank and CommSec.
How much did Woolworths underpay its workers?
Woolworths discovered in 2018 that it had underpaid approximately 5,700 salaried store managers by around $300 million over eight years. The underpayment occurred because managers’ salaries did not adequately compensate for the overtime hours they worked, pushing their effective hourly rate below award minimums.
Why do salaried employees get underpaid so often?
A flat salary can still fall short of the award once actual overtime, penalty hours, and allowances are counted — the exact failure behind the Woolworths and Coles cases. Australian salaried staff must be paid at least the award equivalent for the hours they actually work, so the salary needs an annual reconciliation against award entitlements. Tracking hours with time and attendance is what makes that check possible.
How can employers avoid criminal prosecution for wage theft?
Employers can avoid criminal liability by self-reporting underpayments to the Fair Work Ombudsman and entering a Cooperation Agreement. Small businesses (under 15 employees) have safe harbour if they comply with the Voluntary Small Business Wage Compliance Code. Implementing robust payroll systems with award interpretation is essential, since recklessness can amount to intention.
How does software like RosterElf help with payroll compliance?
RosterElf includes built-in award interpretation for Modern Awards. It automatically calculates correct pay rates including penalties and overtime, tracks hours worked for both casual and salaried staff, and exports clean data to payroll systems — helping businesses catch the award interpretation mistakes that drive most underpayment claims.
How much has the Fair Work Ombudsman recovered for workers?
The Fair Work Ombudsman has recovered around $1.5 billion in underpayments for workers over the past three years. Large organisations and multinationals — including those with sophisticated payroll systems — have been the source of some of the largest wage theft scandals in Australian history, which is why company size is no guarantee of compliance.
Why do large companies still have underpayment issues?
Award complexity, salaried-overtime tracking gaps, legacy payroll systems, and enterprise-agreement interpretation challenges cause issues even for well-resourced companies — as BHP’s $400 million remediation shows. Regular compliance audits and modern award interpretation tools are essential regardless of company size.
