Underpayments in aged care - five key risks that providers can’t ignore

As of 1 January 2025, the underpayment stakes have been raised, with:

• the introduction of the criminal offence of wage theft to the Fair Work Act 2009 (Cth) (FW Act). 

Providers may be criminally liable for wage theft where they intentionally underpay an employee’s wages or entitlements (including superannuation or other entitlements contained in an enterprise agreement). 

If a court determines that a provider has committed wage theft under the FW Act:

• the maximum fine for a company is the higher of three times the amount of the underpayment or $8.25 million; and

• any person who is an accessory to the offence of wage theft, may face a maximum of 10 years in prison, or a fine of up to 3 times the amount of the underpayment $1.65 million, or both;

• an increase to the maximum penalties for civil contraventions related to underpayments applicable to companies, to the greater of;
  • $495,000, or three times the underpayment amount per contravention; and
  • $4,950,000, or three times the underpayment amount for some 'serious contraventions'.

Here are five potential pitfalls you should consider in respect of paying your employees:

1. Construction and interpretation of your enterprise agreement

For providers with enterprise agreement/s, they are often negotiated between bargaining representatives and unions officials. Ensure you have current legal guidance on how the Fair Work Commission or a court would interpret your enterprise agreement to assist with your ongoing, and historic, compliance with its terms.   

2. Configuration of payroll systems

When implementing a new enterprise agreement, or other entitlements, carefully consider the proper configuration of your payroll system, including how new protocols may interact or impact previous programming. 

3. Ongoing payroll audits 

In addition to point 2 above, ask yourself; when was the last time your business reviewed its payroll system to ensure it operates as intended? It is often historic payroll practices that cause the most issues.

4. Purchasing other businesses

If you have acquired, or plan to acquire, another business, consider whether that business has an enterprise agreement and if so, the type of application you must make to the Fair Work Commission to prevent that enterprise agreement following employees whose employment transfers to your business.  

5. Classification mapping

Providers grow at rapid rates. Reflect on whether all roles within your organisation have a position description and when those roles were last mapped against an applicable modern award or enterprise agreement to ensure employees are properly classified and paid equal to, or more than, their applicable minimum rate of pay for all hours worked.