A recent case involving Hamilton Island serves as a timely reminder for small businesses about the serious consequences of not getting wage compliance right. With new criminal underpayment laws in place, the stakes are higher than ever. This case highlights how easy it is for a business to slip up, and how costly the consequences can be.

 

What Happened at Hamilton Island

In January 2025, the Fair Work Ombudsman found that Hamilton Island had underpaid its staff by over $28.1 million due to issues with pay rates, role classifications, and penalty rates. As part of addressing this, Hamilton Island entered into an Enforceable Undertaking (EU), committing to make things right, pay back what was owed, and implement measures to prevent future non-compliance.

This case demonstrates how mistakes, such as incorrectly applying penalty rates or misclassifying employees, can quickly escalate into a significant issue. Hamilton Island had to pay back a substantial amount and faced significant public scrutiny—both of which could have been avoided with better attention to detail in their payroll system.

 

The Consequences of Non-Compliance

Hamilton Island's experience is not unique. The introduction of new criminal underpayment laws means that businesses that fail to meet wage compliance now face much tougher penalties, including the possibility of criminal charges. For small businesses, this makes it even more crucial to ensure compliance and avoid costly mistakes that can damage their reputation and bottom line.

The penalties for non-compliance are serious:

  • Wages owed: The obligation to pay back underpaid wages, which can quickly add up.
  • Legal costs: Defending claims or entering enforceable undertakings can be expensive.
  • Reputation damage: Losing the trust of employees and customers can take years to rebuild.
  • Criminal penalties: Deliberate underpayment can lead to severe consequences for businesses.

 

The Enforceable Undertaking and What Hamilton Island is Doing to Improve

As part of the Enforceable Undertaking, Hamilton Island is committed to improving its payroll processes and ensuring compliance moving forward. The company has already paid back a total of $28.1 million, including $6 million in interest and $500,000 in superannuation to 2,152 current and former staff. This includes underpaid workers from December 2014 to December 2022.

The EU includes a series of important steps aimed at preventing future underpayment issues:

  • Independent audits of its payroll system to ensure ongoing compliance.
  • Workplace relations training for relevant staff to better understand wage compliance and employee entitlements.
  • The recruitment of a Compliance Officer within Hamilton Island to monitor compliance Fwith workplace laws.
  • The creation of a dedicated employee hotline and email address for employees to ask questions about workplace relations.
  • Regular employee feedback sessions to ensure ongoing consultation with staff and improvements based on their feedback.

 

Why This Matters for Businesses

This case serves as an important reminder for businesses to pay attention to the details of wage compliance, especially with the new criminal underpayment laws. As seen in Hamilton Island’s case, simple mistakes can quickly escalate into serious issues, resulting in substantial financial costs and lasting damage to a business’s reputation.
Businesses must take steps now to ensure they are fully compliant with the Fair Work Act. The introduction of criminal penalties means that the risks are greater than ever, and there is little room for error.

 

How My Business Can Help You Stay Compliant

At My Business, we understand that keeping up with compliance requirements can feel overwhelming. That’s why we’re here to help guide you through the process and ensure your business stays on the right side of the law. Here’s how we can support you:

  • Workplace Advice Line: Your first call is free, so you can get expert advice on wage compliance at no cost. After your first call, we offer ongoing support packages to keep your business on track.
  • My Business Workplace: Backed by Australian Business Lawyers & Advisors, My Business Workplace provides a range of practical tools, including legally compliant contracts, templates, and policies. These tools are designed to make sure your business is meeting compliance requirements, so you can focus on running your business.

 

What You Can Do Now

  • Check your payroll: Take a moment to review your payroll systems and ensure they are up to date with Fair Work standards. Small adjustments today can help prevent bigger issues down the line
  • Get expert advice: Don’t hesitate to use your free first call with our Workplace Advice Line . We’re here to help with any questions or concerns you may have about wage compliance
  • Stay compliant with My Business Workplace: With access to tools that ensure your workplace policies and contracts are up to date, you can rest easy knowing you’re compliant.