Help – I Think I’ve Underpaid my Employees

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The majority of Australian business owners would never want to intentionally underpay their employees.

It is a fact though that the Australian wages system can be difficult to navigate. Some Awards are more complicated than others and then of course there are changes to keep on top (think single touch payroll, super rate increases, Award rate increases…the list goes on).

“Quality is the best business plan.” – John Lasseter


Here are the basic steps to take if you find you have underpaid your employees.

1. Gather your information
  • Time books
  • Payslips
  • Employment Contracts
  • Enterprise Agreement or other registered Agreement (if you have one)
  • Access to the latest minimum rates and relevant minimum Award rates (available from the Fair Work website)
2. Work out how long the employee was underpaid
3. Work out how much the employee was paid
4. Work out what they were actually entitled to be paid
5. Calculate how much the employee has been underpaid
6. Discuss with the employee and confirm back payment arrangements


TIP Set a reminder for when employees are likely to need a pay increase – eg junior employee’s birthdays or apprentice’s yearly progressions or anniversaries.

Keep up to date with future minimum rate increases

Minimum rate increases often happen on 1st July each year. Make sure you know what Award your workers come under. Add these Award increase dates into your calendar/diary as reminders as well.

Where to turn to for support:

  • Fair Work
  • BAS Agents
  • Accountants
  • HR consultants
  • Lawyers

In some circumstances, underpayments should be reported to Fair Work. You can find out more here:   https://www.fairwork.gov.au/about-us/accountability/our-policies

It’s important to note that if you’re an Australian business owner looking to outsource your payroll to a bookkeeper, they must be a registered BAS Agent. Registered BAS Agents must adhere to strict requirements set by the Tax Practitioner’s Board – including specific qualifications that include payroll training, ongoing professional development, insurance and more.

We take care of payroll for many of our bookkeeping clients, as part of our fixed monthly bookkeeping fee packages. Everything is taken care of including superannuation, single touch payroll filing, end of financial year reporting and more. We’re also a trusted sounding board for our clients when they come across a new scenario that they’re unsure how to deal with, or if they’re looking at budgeting for new employees or future pay rate increases.

About us:

Festival Bookkeeping are a team of Xero advisers and bookkeepers located in Adelaide, South Australia. We help busy business owners and their teams Australia-wide. You can contact us on 0421 501 887 or sarina@festivalbookkeeping.com.au

Learn more about our bookkeeping services here: https://festivalbookkeeping.com.au/services/xero-bookkeeping-packages/

Looking for more helpful articles about bookkeeping and accounting? Try https://festivalbookkeeping.com.au/minimum-wages-in-australia/ and https://festivalbookkeeping.com.au/20-tips-to-stay-more-focused-at-work/

Read what our happy clients have to say here: https://festivalbookkeeping.com.au/testimonials/

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