When businesses discover they have underpaid wages, the first challenge is often figuring out where to begin.
In December 2024, a Circular from the Australian Public Service Commission (APSC) was released to provide clear, actionable guidance for Government departments and agencies take the right steps following an underpayment. The Circular is also a very useful starting point for non-Government organisations.
The APSC, an agency within the Department of the Prime Minister and Cabinet, focuses on workforce capabilities in the Australian Public Service, which employs about 160,000 people—nearly 1% of Australia’s workforce.
Key takeaways of the Circular
Overall, organisations should proactively ensure that employees receive correct entitlements, including wages, allowances, superannuation, and any deductions.
If an underpayment has occurred:
- Correct errors immediately: Make repayments as quickly as possible to affected employees.
- Identify the cause: Investigate the root issue, such as payroll system flaws, to prevent the same problem from recurring.
- Report underpayments: Any significant underpayment should be self-reported to the Fair Work Ombudsman.
What businesses should do to prevent underpayments
- Strengthen the compliance framework: Review and enhance systems to ensure compliance with:
- Legislation: Adhere to the Fair Work Act.
- Industrial agreements: Understand and apply awards and enterprise agreements correctly.
- Contracts: Honour the terms of employment contracts.
- Provide adequate training: Ensure payroll and HR/Workplace Relations staff have the training and resources necessary to ensure entitlements are being paid correctly.
- Raise awareness across teams: Managers should be made aware of:
- The serious consequences of wage non-compliance.
- Their obligation if they discover potential payment issues.
- Audit payroll processes regularly: Conduct routine payroll audits and process reviews to detect discrepancies early.
- Seek expert guidance: Consult legal or payroll compliance professionals if there is any uncertainty about interpreting entitlements.
Why the APSC Circular matters
In 2025, one thing is certain: everyone deserves to be paid what they are entitled to.
By following these 8 key steps, organisations can take proactive measures to prevent wage underpayments and ensure that any discrepancies are promptly detected, investigated, and remediated.
This approach not only fosters a positive workplace environment but also strengthens trust and demonstrates a commitment to upholding legal obligations as an employer.
For detailed guidance, refer to the full APSC circular: Correction of Underpayment of Wages and Entitlements.
