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Employers have obligations under the Fair Work Act 2009 (Cth) (FW Act) to pay employees their minimum entitlements for work performed.

If an employer becomes aware of an actual or suspected underpayment, the employer must rectify the error as soon as possible and may be required to inform the Fair Work Ombudsman (FWO) of any breach of the FW Act.

In May 2025, the FWO released an updated Payroll Remediation Program guide (the Guide) to assist employers when developing their own remediation program to rectify underpayments.

The Guide addresses common issues such as the methodology used for calculating underpayments including data sources and assumptions applied.

In regard to calculating back pay, the FWO has made clear its position that:

• employees must be paid in full for each pay period and each pay period should be treated as a separate calculation;
• this means an overpayment in one pay period cannot be used to off-set an underpayment in a different pay period; and
• an overpayment for one designated entitlement cannot be used to off-set an underpayment of a different entitlement.

Employers who identify an actual or suspected breach should seek advice at the earliest opportunity.

For further information, please use the following link to access the Guide: New Payroll Remediation Program guide - Fair Work Ombudsman.

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Information provided in this news alert is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.‍