Award and Pay Mistakes: Could Cost Your Business Thousands

Award and Pay Mistakes: Why 'Set and Forget' Could Cost Your Business Thousands

Sally Dillon • March 31, 2025

Overview

Think your payroll software has got you covered? Think again. In Australia, you, not your payroll system, are responsible for ensuring staff are paid correctly under the right Award, classification, and entitlements. If something’s wrong, Fair Work won’t fine your software provider. They’ll fine you.

Too many businesses set up payroll once and never revisit it. But Australia’s industrial relations system is one of the most complex in the world. With over 120 Modern Awards, changing minimum wages, and varying entitlements, keeping up can feel like chasing a moving target.

That’s why Award and pay mistakes are one of the most common and expensive HR issues affecting Australian businesses today.

Examples of What Can Go Wrong

1. Hospitality Industry Underpayments

In December 2024, the operators of Hotel Frangos and Café Koukla were penalised $104,000 for deliberately underpaying staff. The Fair Work Ombudsman took legal action, emphasising the seriousness of wage underpayment in the hospitality sector.

2. Security Company Wage Theft

In January 2025, a Perth-based security company was found to have deliberately underpaid more than $900,000 to its guards. The Fair Work Ombudsman initiated legal proceedings, underscoring the importance of compliance with wage laws.

3. University Staff Underpayments

In December 2024, the University of Sydney entered into an Enforceable Undertaking after underpaying staff. The Fair Work Ombudsman highlighted the need for large institutions to ensure compliance with workplace laws.

4. Fast-Food Sector Violations

In February 2025, penalties were imposed for the underpayment of migrant workers at United Petroleum outlets. The Fair Work Ombudsman emphasised the need for businesses to adhere to fair pay standards, especially for vulnerable worker groups.

5. Sushi Chain Penalised for Exploitation

In August 2024, the former operators of Sushi Bay outlets faced record penalties of $15.3 million for exploiting migrant workers. This case highlights the severe repercussions of wage exploitation.

6. Hamilton Island Staff Back-Pay

In February 2025, Hamilton Island Enterprises back-paid $28.1 million to over 2,000 current and former staff after underpaying their award entitlements over eight years. This significant repayment underscores the importance of regular payroll audits.

7. Fast-Food Workers Compensated

In November 2024, the Fair Work Ombudsman recovered over $310,000 for 370 workers in fast-food outlets across Adelaide's western suburbs after an investigation into wage theft. This demonstrates the widespread nature of underpayment issues in the fast-food industry.

8. Industrial Equipment Company Fined

In December 2024, ABMENG Pty Ltd, a Sunshine Coast industrial equipment company, was fined $56,000 for failing to pay employees their leave entitlements. The company's sole director faced an additional $11,000 penalty, highlighting the personal liability directors can face.

9. University Underpayment Issues

In March 2025, reports indicated that Australian universities had underpaid staff by $176 million over four years, affecting more than 80,000 employees. This systemic issue points to the need for comprehensive payroll reviews in the education sector.

10. Bar Owner Fined for Underpayment

In December 2024, Rocco Esposito, owner of Bar Rosella in Melbourne, was fined over $60,000 for underpaying a worker at his previous establishment. This case serves as a reminder that individual business owners can be held accountable for wage theft.

These cases underscore the critical importance of regular payroll audits, accurate Award interpretation, and proactive compliance measures to prevent underpayment issues.

Why This Matters to Business Owners

There’s a common mindset among Australian SMEs: “We’re too small to worry about that.” But Fair Work doesn’t give you a free pass based on size. In fact, smaller businesses are more likely to get it wrong because they lack dedicated HR or legal teams.

With Fair Work audits increasing and backpay cases hitting headlines regularly, the risk of ignoring your obligations is real.

In addition, a new wave of employee activism and transparency particularly through social media means staff are more informed than ever about their rights. If you’re not compliant, your team (or ex-team) will find out.

Key Takeaways and Action Points

1. Don’t Rely on Software Alone

Your payroll system only processes the data it’s given.
If that data is incorrect, you’re still liable.

2. Don’t rely on Advisors where HR isn’t their speciality

Most accountants, bookkeepers, and business coaches aren’t qualified or experienced in interpreting Awards or employment conditions. With constant changes to legislation and Award provisions, it’s critical to seek support from a specialist HR Consultant who works with these issues daily.
While some lawyers are well-versed in Fair Work legislation, many generalist practitioners aren’t across the nuances of Award interpretation or compliance. HR Consultants are often more practical, cost-effective, and solutions-focused.

3. Get an Award and Pay Audit

Have an HR or legal professional audit your current Awards, classifications, and pay rates.
Make this an annual event, especially after any wage increases or Award changes.

4. Review Every Role Against the Right Award

Don’t assume everyone’s covered under the same agreement.
Job titles are not the same as job classifications.

5. Track Entitlements Transparently

Keep detailed records of leave loading, penalty rates, super, and allowances.
Make it accessible and understandable for your staff too.

6. Train Managers and Admin Staff

The people doing your rostering, approving timesheets, or managing payroll need to understand the basics of Awards and entitlements.

7. Create a Consistent Pay and Classification Policy

Document how roles are evaluated and paid.
Ensure equity and transparency across your organisation.

Final Thoughts

Employment legislation isn’t something to 'wing' or guess your way through. Between dodgy contracts, toxic team dynamics, and costly payroll mistakes, the hidden costs of poor HR practices can run into the tens or hundreds of thousands.

But the good news? Each of these mistakes is avoidable - with the right knowledge, proactive systems, and expert support.

Consider this: Is a $500 payroll audit cheaper than a $125,000 backpay claim next year?

The real question is not if you should check your compliance - it's how quickly you can fix it before it costs you.

FAQs

1. Can I just use a free employment contract template that I downloaded from the internet?
You could - but you shouldn’t. Templates rarely account for the nuances of Australian employment law, Modern Awards, or specific industry entitlements, not to mention specifics of your workplace.

2. What’s the easiest way to tell if someone’s under the wrong Award?
Get a professional HR audit. Roles should be assessed against duties, not job titles, and many roles can fall under different Awards depending on industry context.

3. Can I be fined even if my payroll system made the mistake?
Yes. Fair Work holds employers, not software, responsible for errors.

4. What’s the best investment to avoid these HR issues?
Engage an HR consultant to review your contracts, pay structures, and procedures. Prevention is far cheaper than the Fair Work Commission determining underpayments down the track – remember it’s not just wages that have to be fixed up, it’s tax and super if you make an error.

Need more help?

If these changes feel overwhelming or if you’re unsure where to begin, here’s how we can help you:

Click here to book a FREE 30 minute consultation to discuss your HR challenges.
Click here to get a HR Health Check to review your policies, procedures and frameworks.
Click here to join our mailing list to get more free tips, advice and updates on all things HR, WHS and Leadership.

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By Sally Dillon • February 26, 2025

Can ChatGPT Replace HR? The Risks of AI-Generated HR Advice AI tools like ChatGPT are revolutionizing the workplace, but can they handle complex HR decisions, employee issues, or legal compliance? The short answer—not safely. Businesses that rely on AI for terminations, pay rates, workplace investigations, or employment contracts risk costly legal mistakes, financial penalties, and reputational damage. HR isn’t just about policies—it’s about human behavior, legal nuance, and ethical decision-making—things AI simply doesn’t understand. In this article, we explore real-world examples of AI-generated HR blunders and the hidden risks of trusting ChatGPT for critical people management decisions. Plus, we share insights on where AI can help—and where it absolutely shouldn’t. Read on to protect your business from HR disasters.

Why HR is Your Most Powerful Business Asset | Strategic HR & Leadership

By Sally Dillon • January 29, 2025

Introduction HR is one of the most misunderstood roles in business. Some believe HR exists to protect employees. Others think HR’s sole job is to defend the company. Both are wrong. And this misunderstanding is costing businesses money, trust, and talent. For over two decades, I’ve seen organisations sideline HR - treating them as a policy enforcer or an afterthought. The result? 🚨 Employees don’t trust HR. 🚨 Leaders fail to leverage HR strategically. 🚨 Businesses struggle with culture, retention, and performance. But here’s the truth: HR isn’t about sides. It’s about solutions. Great HR drives business outcomes by balancing people and performance. The question is: Are you using HR to its full potential? HR as a Strategic Powerhouse, Not Just a Policy Enforcer The best businesses don’t just "have" an HR department. They embed HR into leadership decisions. HR isn’t just about hiring, firing, and compliance - it’s about: ✅ Shaping culture and engagement (which directly impacts performance). ✅ Developing leadership capabilities (to create stronger teams). ✅ Driving strategic workforce planning (so you have the right people, in the right roles, at the right time). ✅ Maximising financial impact - because people are both your biggest cost and your greatest asset. If your HR function isn’t influencing leadership, growth, and profitability , you're leaving money on the table. HR as a Key Voice on Your Leadership Team Many leadership teams still treat HR as a support function rather than a core business driver. That’s a mistake. Your Chief People Officer (CPO) or HR Director should have the same level of influence as your CFO, COO, or Head of Sales. Why? Because your people strategy IS your business strategy. 🔹 You wouldn’t make financial decisions without consulting your CFO. 🔹 You wouldn’t make operational changes without your COO’s input. 🔹 So why make leadership and talent decisions without HR at the table ? And yet, in many businesses, HR reports to finance, operations, or admin - departments that have their own agenda when it comes to assessing people needs, budgets, and workforce requirements. HR should report directly to the CEO, or Business Owner to ensure people strategy is aligned with business strategy - not just budget constraints or operational efficiency. Because when HR is filtered through another department’s lens, critical workforce decisions become secondary to financial targets, logistical priorities, or admin processes. If your HR leader doesn’t report directly to the top, you may be unknowingly limiting their ability to drive real business outcomes. Are You Using HR to Its Full Potential? Take a moment and ask yourself: ❓ If you have an in-house HR team, are you using their skills and expertise across all areas of your business? Or are they stuck in admin-heavy tasks, when they could be driving strategic initiatives? ❓ If you’re a small or medium business and don’t have in-house HR, why haven’t you partnered with an external consultant? What’s stopping you from leveraging the expertise that could transform your business? In larger businesses, HR should go beyond just ‘HR.’ Under an expanded People & Culture framework, HR should oversee: ✔ Training & Development – ensuring leaders and employees are constantly upskilling. ✔ Work Health & Safety – making compliance, risk management, and employee wellbeing a priority. ✔ Recruitment & Talent Strategy – not just filling roles but attracting and retaining top performers. ✔ Major Projects & Change Management – ensuring workforce alignment with organisational shifts. In smaller businesses , these functions can be outsourced or strategically managed by an external HR consultant working directly with the business owner. This ensures a strong, aligned people strategy, while certain operational roles (finance, admin, or operations) may take on specific HR tasks - as long as they receive the right training, support, and strategic direction. HR isn’t just a department - it’s an investment in your business’s future. Whether in-house or external, make sure your HR function is working at a strategic level, not just buried in paperwork. HR’s Impact on the Bottom Line People aren’t just a cost centre - they are a profit driver. 📊 Labour is often one of the largest expenses in a business - so managing it strategically impacts profitability. 📊 Engaged employees are 23% more profitable , according to Gallup. 📊 Turnover costs 50-200% of an employee’s salary - losing top talent is expensive. When HR has a strategic voice in leadership , businesses see: ✔ Stronger alignment between business goals and people strategy. ✔ Faster, smarter hiring that supports growth. ✔ Better leadership development , reducing costly turnover. ✔ More effective workforce planning , so salaries, training, and hiring are investments—not wasted costs. Final Thought: HR is Not a Department - It’s a Business Growth Lever If your HR function feels like a compliance department , you’re doing it wrong. HR should be a leadership asset , helping your business make smarter, people-focused decisions. So, here’s my challenge to you: 📌 If you’re a CEO or MD - bring HR into the strategy conversation early and often. 📌 If you’re a leader - use HR as a coaching and development resource, not just a policy checker or problem fixer. 📌 If you’re in HR - push for a strategic role in leadership, not just operational support. Because when HR and leadership align , businesses don’t just succeed. They thrive. Want to Develop Stronger, More Strategic Leaders? If you’re serious about building leadership capability in your business, let’s talk. My Leadership Dynamics Accellerator Program helps CEOs, Business Owners, Leaders and HR teams create high-performing leaders who know how to balance people and performance. 📅 Book a free leadership triage call to see how we can help here . 🚀 Save your spot in our next Leadership Dynamics Accelerator Program here . 📩 Send us an email for more information here . Let’s build something stronger - together.