The Fair Work Ombudsman releases Payroll Remediation Program Guide

On 1 May 2025, the Fair Work Ombudsman (FWO) released the Payroll Remediation Program Guide (Guide). The Guide is designed to assist employers, and their representatives, to identify and correct underpayments of employee entitlements under the Fair Work Act 2009 (Cth) (FW Act).

Purpose of the Guide

The Guide has been developed in response to:

• the increase in self-reported compliance issues observed by the FWO; and
• requests from the workplace community for guidance to undertake medium to large scale Payroll Remediation Programs (PRPs).

The Guide aims to assist employers who have become aware of actual or suspected non-compliance and intend on undertaking a PRP to assess and address the issues. The Guide assists all employers facing a suspected or known issue and can also assist larger employers with complex issues relating to multiple industrial instruments, or where the quantum of underpayments or number of affected employees, is high. Key aspects of the Guide are summarised below.

Calculating payments

The Guide provides that, when designing a PRP, employers should develop a methodology for calculating historical employee entitlements. This methodology may be reviewed by the FWO (where the FWO is involved).

As part of its review, consideration will be given to the industrial instruments that apply to the workforce, what terms of the instruments will be applied or excluded from the analysis (and the reasons) and how the employer has interpreted the terms of any industrial instrument in its calculations. The FWO may also seek information on what sources of pay, time and attendance, and employee data sets are available, and what sources are being used to develop the methodology.

The FWO recommends that employers consult early and effectively with stakeholders to ensure that methodology decisions are fully informed and optimised. It also acknowledges that third-party professional providers may be able to address areas of complexity or volume by offering expertise to optimise data collection, accuracy, structure and analytics or remediation methodology.

Further, the Guide notes that superannuation guarantee amounts may be payable on amounts that were payable under the FW Act or a fair work instrument under s 559 of the FW Act. Employers are encouraged to seek professional tax advice or contact the Australian Taxation Office about their superannuation payment obligations in this respect.

Time period for review

The Guide notes that the FWO will seek information about the period being reviewed (where the FWO is involved). Whilst the period of a review may be dependent on the relevant issues, the FWO generally expects that the period looks back as far as possible, considering:

• the availability of employee records or other reliable data sources to assess and quantify underpayments; and
• the point in time when non-compliance started to occur.

The FWO recognises the statutory limitation period of six (6) years in the FW Act for the commencement of proceedings to recover an underpayment or seek penalties for contraventions. In circumstances where the underpayment issue was (or may have been) occurring prior to that, the FWO expects that six years should be viewed as a minimum period for review, and not as a bar to additional remediation. The FWO may ask the employer for the basis for any decision to limit pay remediation to the statutory six (6) year limitation period.

Reporting to the FWO

Self-reporting to the FWO is not mandated in the FW Act but the FWO recommends that employers who identify broad and/or potentially systemic non-compliance report to the FWO at an early stage, even if all issues have not yet been identified. Employers may then report further information to the FWO as it becomes available.  The Guide notes that payroll errors resulting in underpayments over a short period of time (up to 12 months) do not need to be reported to the FWO, as long as:

• employees are appropriately informed of the underpayment;
• employees are back paid in full as soon as possible; and
• changes are implemented to ensure the error does not happen again.

This is consistent with the FWO’s previous position set out in its previous Compliance and Enforcement Policy.

If the FWO becomes aware of potential non-compliance via other channels prior to notification by the employer, and in the absence of a satisfactory explanation or basis for the timing, the employer’s  subsequent notification generally will not be treated as an early or voluntary self-report of non-compliance. This can have an impact on the enforcement action the FWO decides to take against the employer which can include prosecution, offer of an Enforceable Undertaking or a Cooperation Agreement. Further information about the criminal wage theft offence is available here.

After notifying the FWO, the FWO will review or investigate the employer’s PRP and seek to obtain assurances from the employer that steps are being taken to review and remediate the non-compliance.

Communicating with employees

The Guide also emphasises the importance of effectively communicating with current and former employees impacted by the non-compliance. A multi-channel approach is recommended to maximise the reach of communications to employees, and may include email, workplace notification platforms, phone calls, SMS and letters. Employers are also expected to take all reasonable steps to contact and back pay former employees affected by the period of non-compliance.

Interest on back payments

Whilst back payments are not legally required to include interest, the Guide states that the FWO expects interest to be paid on underpayment amounts as part of a best practice approach. Interest is intended to compensate impacted employees for the loss of some benefits associated with timely accurate wage payments. The Guide suggests using the Pre-Judgment Rate from the Federal Court of Australia’s Interest on Judgments Practice Note, which is currently 8.35% (and subject to change).

Next steps

For more information on the Guide and compliance pay obligations, please contact the Workplace Advisory and Disputes team at Gadens. The team regularly assists employers undertake complex remediation projects including those involving working with third party accounting specialists and the regulator.

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Authored by:
Amanda Junkeer, Partner
Isabella Kiparizov, Lawyer
Jenna Blatch-Williams, Graduate