Payroll Audit and Remediation

Employers have a legal obligation to comply with wage and entitlement terms and conditions set by Awards and Enterprise Agreements (collectively, Industrial Instruments) and the Fair Work Act 2009 (Act).

However, as the industrial relations system becomes more complex, even the most minor payroll errors (however inadvertent) can become a significant and costly problem for employers.

In the past few years, obligations and requirements contained in Industrial Instruments have changed as a result of industrial relations reform at the Commonwealth level.

Criminal and Civil Actions

Apart from the remediation bill, which can really add up, underpayment of wages and entitlements exposes organisations and their directors and officers to severe civil fines and penalties for contravening the Act (which includes a contravention of an Industrial Instrument).

As at 1 July 2025, civil penalty amounts that a Court can order for a contravention can be up to:

For an individual:

• $19,800 per contravention
• $198,000 per contravention for some ‘serious contraventions’

For a company with less than 15 employees:

• $99,000 per contravention
• $990,000 per contravention for some ‘serious contraventions’

For a company with 15 or more employees:

• $495,000, or for contraventions relating to an underpayment, the greater of $495,000 or 3 times the underpayment amount per contravention.
• $4,950,000, or for contraventions relating to an underpayment, the greater of $4,950,000 or 3 times the underpayment amount per contravention for some ‘serious contraventions’.

A serious contravention will be found where it held that an employer knew that they were contravening workplace laws OR they were acting in a reckless manner.

In addition, since 1 January 2025, deliberate wage underpayments also attract criminal sanctions.

Proactive Monitoring for Compliance

IRiQ Law undertakes Payroll Audits that are aimed at identifing systemic issues in payroll processes, and to suggest practical actions that can be taken to ensure that any issues identified are rectified, and any underpayment remediated.

The need for a Payroll Audit may arise from an identified error or may be part of a broader risk management strategy.

Because of the risk of serious civil and criminal penalties, IRiQ Law recommend that Payroll Audits be done as part of a broader legal compliance enquiry, conducted under legal professional privilege to preserve the confidentiality of the result.

IRiQ Law takes a multi-disciplinary approach to payroll compliance. We have developed a propriety system called IRPAY, which leverages technology and data analytics with our IR and legal expertise. The result is a wholistic solution to payroll audit and remediation and risk management for organisations, directors and officers.

When you’ve been contacted about a concern

Contact IRiQ Law today to discuss how we can assist you with proactive compliance activities, or to assess compliance as a result of an employee complaint, or inquiry from the Fair Work Ombudsman.

Phone: 07 3077 6767
Email: iriqlaw@iriqlaw.com.au