Respond to an underpayment claim
We will work out what is actually owed, and help you deal with it before it becomes something larger.Most underpayment is not deliberate. It comes from a misclassified role, or an award nobody realised applied. Or an annualised salary that stopped covering the hours worked, or a rate that was right when it was set. None of that is a defence. What it changes is the response. An employer who works out the number and fixes it is in a very different position. Disputing it and being proved wrong later is the expensive path.
The real number, calculated
The exposure is worked out from the award and the records before you commit to any position.
Everyone in the same role checked
A classification error rarely affects one person, and finding the rest early keeps it containable.
The cause fixed, not just the claim
The payroll or classification error is corrected, so the liability stops accruing.
What happens when an underpayment is alleged?
A claim usually starts in one of three ways. The employee raises it directly, often on leaving. The Fair Work Ombudsman makes an enquiry after a complaint. Or a claim is filed in court to recover the amount.
Underpayment is assessed against the applicable modern award or enterprise agreement, or against the National Employment Standards, over the whole period. Six years is the usual limit on recovery. The exposure is not only the shortfall. Civil penalties apply to contraventions, and they can reach individuals involved as well as the company. Intentional underpayment has been a criminal offence since January 2025. Employers who self-report and rectify are generally treated differently from those who do not.
I pay above the minimum wage. Can I still be underpaying?
Yes, and this is the most common way it happens. Awards set more than a base rate. They set classifications, overtime, penalty rates, allowances and loadings. A salary well above the minimum can still fall short once the hours actually worked are costed against the award.
How far back can a claim go?
Generally six years. That is why a small weekly shortfall becomes a large number. It is also why a misclassified role is usually a cohort problem rather than an individual one.
What happens if the Fair Work Ombudsman gets involved?
They will ask for records and an explanation. How you respond matters a great deal. Employers who cooperate, calculate the shortfall and rectify it are commonly dealt with by agreement. Employers who obstruct or deny without checking are the ones who end up facing enforcement.
Can I be personally liable?
You can. The accessorial liability provisions reach people involved in a contravention, which can include directors and managers. Intentional underpayment has also been a criminal offence since January 2025. That is why deliberate delay is a poor strategy.
Find out what is actually owed before you answer
Tell us what has been alleged and send us the pay records. We will work out the real number before you commit to a position on it.
You can be badly wrong about this while acting in good faith
Someone says they were underpaid. You believe you have paid people properly and you are not sure where their figure comes from. Working out who is right means going back through years of rosters, rates and award classifications.
The temptation is to answer the allegation straight away. That is the most expensive thing you can do, because a position taken before the arithmetic is done is very hard to retreat from.
- We will identify the award and classification that apply to the role.
- We will calculate the actual entitlement against what was paid over the period.
- We will assess whether others in the same role are affected.
- We will advise on rectification, including back pay, superannuation and interest.
- We will deal with the Fair Work Ombudsman on your behalf.
A former employee says they were underpaid for years
The claim arrived after they left, which is when most of them do. There is a spreadsheet attached, or a letter from a lawyer, or a notice from the Ombudsman. The figure looks implausible to you. You have always paid above the minimum wage and you assumed that was the end of it. Now somebody is talking about award classifications, overtime, allowances and loadings you have never had to think about.
What's included in your underpayment response service
- Award coverage and classification assessment.
- Entitlement reconstruction against payroll records.
- Exposure calculation across the affected period and cohort.
- Rectification plan, including superannuation and interest.
- Fair Work Ombudsman correspondence and representation.
- Advice on correcting the underlying payroll or classification error.
What makes an underpayment claim grow
The claim that arrives is rarely the claim that ends. An employer who denies it without checking, and is then shown to be wrong, has converted an arithmetic problem into a credibility problem. The Ombudsman treats a cooperative employer differently from an obstructive one. That difference shows up in whether the matter resolves by agreement or by enforcement.
The number itself compounds in ways employers do not expect. One misclassified role is usually every person in that role, across the whole period. Overtime and penalty rates that were never paid attract superannuation on top. Six years of it accrues before anyone looks. And where a company cannot pay what is finally assessed, the penalty provisions reach the people involved in the contravention personally.
How we get to the real number and deal with it
We work out the correct classification first, because everything follows from it. Which award covers the work, what level the role sits at, and what that entitles the employee to in rates, loadings, allowances and penalties. Then we reconstruct the actual entitlement against what was paid, across the full period and across anyone else in the same position.
Often the number is far smaller than claimed, and having it calculated properly is what ends the argument. Where there is a genuine shortfall we help you rectify it, which usually means back pay, superannuation and interest. We deal with the Ombudsman if they are involved. Then we fix the cause, so the same exposure does not keep accruing. Employers who come to this properly generally resolve it without penalties.
How an underpayment claim gets resolved
The real number, the rectification, and the cause fixed.Classify the role
We identify the award and classification that apply, which is what the entire entitlement is built on.
Calculate the exposure
We reconstruct what was owed against what was paid, across the period and across everyone in the same role.
Rectify and fix
We help you make good what is genuinely owed, deal with the Ombudsman, and correct the cause.
Get the arithmetic right before you take a position
Nobody likes being told they have short-changed their own staff, least of all employers who think of themselves as paying well. Most of the underpayment we see comes from employers who believed they were above the line. They had never had a reason to read the award closely. That does not make the liability go away, but it does mean the situation is usually recoverable.
We act for employers on underpayment claims and Ombudsman enquiries. The first thing we do is work out the number. Almost every bad outcome here starts with a position taken before anyone did the arithmetic. If the claim is overstated we will show that. If it is not, fixing it early is what keeps this a payment rather than a prosecution.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Work out what is owed, then deal with it
Send us the claim and the pay records behind it. We will calculate the real exposure, tell you what has to be rectified, and deal with the Ombudsman if they are already involved.
More on this area of law
Read more about underpayment claims, award compliance and Fair Work Ombudsman investigations, and how ADLV Law can help.
Unfair dismissal vs general protections: what employers need to know
Unfair dismissal vs general protections: what employers need to know
You’ve just dismissed an employee who wasn’t performing. Two weeks later, you receive an unfair dismissal claim. Then another letter arrives, a general protections claim for
Profit sharing without equity: rewarding staff without giving away your business
Profit sharing without equity: rewarding staff without giving away your business
What legal issues do you need to look out for in 2025?
What legal issues do you need to look out for in 2025?
Payroll Tax Amnesty for Medical Practices in South Australia
Payroll Tax Amnesty for Medical Practices in South Australia
Payroll tax applies when the total wages expense for a business equals or exceeds $1.5 million in a financial year. Medical clinics in South Australia have
Do you have a new doctor joining your medical practice?
Do you have a new doctor joining your medical practice?
There are several ways a doctor can join your medical practice. As the owner of the practice, it is important for you to understand the key