The Court found that annual salaries cannot be used to offset overtime and penalties across pay periods, and that employers must meet award obligations in each pay cycle with accurate time records. 

What has happened 

On 5 September 2025, the Federal Court handed down its verdict in Fair Work Ombudsman v Woolworths Group Limited; Fair Work Ombudsman v Coles Supermarkets Australia Pty Ltd; Baker v Woolworths Group Limited; Pabalan v Coles Supermarkets Australia Pty Ltd [2025] FCA 1092. 

The Court examined a range of issues and found both Coles and Woolworths breached workplace laws. The headline issue was clarified regarding the interaction between annual salaries and award entitlements under the Fair Work Act. It was ruled that annual salaries cannot be used to offset overtime, penalty rates, or allowances across multiple pay periods.  

Instead, employers must ensure each pay cycle independently satisfies the minimum conditions set out in the relevant award. This brings the effectiveness of annualised arrangements into question, as remediation payments may be required for any pay period in which award entitlements exceed the annualised salary. 

In addition to the offsetting matter, the Court considered a range of other issues, including: 

1. all-inclusive annual salary arrangements do not remove the requirement to keep records of entitlements. Employers must not only keep time and work records but also interpret and classify the time and work into a record of an employee’s entitlement. A breach of record-keeping requirements may shift the burden of proof to employers 

2. confirmation that leave and rostered public holidays not worked count as hours worked (e.g. for determining overtime based on cumulative time calculations) 

3. confirmation that for agreements to be effective, employees must also understand that they are forgoing rights under the Award 

4. approval of a methodology for calculating underpayments where records were incomplete or missing. 

A further case management hearing is listed for 2 October 2025. It is also possible that Coles and Woolworths may appeal the decision. 

Implications for employers 

If not appealed, this decision may have significant implications for employers that rely on annual salary arrangements to cover employee entitlements arising out of industrial instruments. Retrospectively, this may mean that wage underpayments could arise even where employees are better off on an annual basis. Going forward it may mean that employers need to retain better and more sophisticated records, calculate notional Award or EBA-based salaries for record-keeping purposes, and top up employee salary on a periodic basis if necessary. 

How SW can help 

Given the current uncertainty surrounding the case management hearing and its potential outcomes, we recommend that employers take this opportunity to review and assess any potential gaps or areas of exposure.  

SW can assist by: 

• conducting gap and risk assessments across employment arrangements, payroll systems, timekeeping processes, and record-keeping practices to identify where entitlements may not be met or where obligations are unclear 

• developing simple testing models to help clients estimate underpayment exposure and assess risk – whether using existing data or scenario-based assumptions 

• supporting clients to reconstruct detailed entitlement records using available time and attendance data (e.g. clock-in/out logs) and identify where further tracking or classification may be needed. 

Whether you have robust data or limited records, we can help you understand your exposure and take practical steps to reduce legal and financial risk. 

To find out how SW can tailor a solution to your organisation’s needs and safeguard your compliance, get in touch with our team today. 

Contributor  

Thomas Grimsey-Carr 

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From 1 February 2023, employees of non-small business employers (employers with 15 or more employees on 1 February 2023) were able to access 10 days of paid family and domestic violence leave per annum.  

 What is changing?  

Employees employed by small business employers (employers with less than 15 employees) will be able to access 10 days paid leave per annum from 1 August 2023.  It will be a minimum leave entitlement such as annual, sick and carer’s leave. 

The leave entitlement will be available to part-time and casual employees. It is not pro-rated for part-time or casual employees. 

It is an entitlement upfront and will not accumulate from year to year if it is not used. 

What is the leave used for? 

The leave can be taken to deal with the impacts of family and domestic violence where it is not practical to do so outside of their working hours.  

This might include: 

• Making arrangements for their own or a family member’s safety including relocation 
• Attending court or accessing police services 
• Attending counselling, or appointments with medical, financial, or legal professionals.

The leave can be taken as single or multiple days, or as part days by agreement with the employer.  

Can an employer ask the employee to provide evidence? 

An employer can request for evidence to show the employee needs to attend to something and it is not practical to attend to it outside their work hours.  

Types of evidence an employee may provide include: 

• A Statutory Declaration 
• Family violence support service documents 
• Documents issued by a police service, or 
• Documents issued by a court.

Employers must take reasonable steps to keep information about notice or evidence for family and domestic violence leave confidential. 

How much is to paid to an employee? 

For full-time or part-time employees leave must be paid at the employee’s full rate of pay for the hours they would have worked had they not taken leave. 

Casual employees must be paid at their full rate of pay for the hours they were rostered to work in the period they took leave. 

The employee’s full pay rate is their base rate plus any loadings, allowances, overtime and penalty rates, bonuses, incentive payments or other separately identifiable amounts. 

Is superannuation payable ? 

Paid family and domestic violence leave is considered Ordinary Time Earnings (OTE), therefore superannuation is payable.  

How are these payments to be shown on the payslip? 

The pay slip must not categorise the amount as family and domestic violence leave payments. 

The earnings must be shown as ordinary hours of work, or another kind of payment for performing work such as an allowance, bonus or overtime payment.  It is best practice to show these amounts on the pay slip in a way that makes it appear the employee has not taken leave. 

Employers must also keep a record of the accrued leave balance and leave taken by employee outside of the payroll system. Payslips must not show family and domestic leave days being taken or the accrued leave balance. 

What if an employers fail to comply with the family and domestic violence provisions? 

Non-compliance with paid family and domestic violence leave provisions will give rise to breaches of the civil remedy provisions under Part 4-1 of the Fair Work Act, exposing employers and individuals such as managers, to prosecution and significant monetary penalties. 

What does this mean for small business employers? 

Employers must ensure they comply with the new laws and provide these benefits to relevant employees. 

Employers should:

• Provide education and training to managers on the content of the new laws and how to deal with applications for the leave 
• Communicate the relevant changes to staff 
• Review and update payroll systems, policies and procedures to ensure compliance 
• Consider reviewing and changing employment contracts to include new leave entitlements 
• Restrict record keeping and communication to in person and in writing (in an employee’s physical file) at the workplace. This is for the safety of the victim, as domestic violence offenders will often have access to the victim’s email, work logins and physical mail 
• Implement record-keeping arrangements to track leave taken and leave accrued 
• Begin planning and budgeting for payments.

How can SW help   

• SW has an experienced outsourcing team to assist with your payroll function. We assist employers in understanding and becoming familiar with the new requirements to make this change as easy as possible, while also ensuring employers are meeting compliance requirements  
• Review and assist with updating the payroll systems to ensure compliance 
• Review processing of leave payments and disclosure on payslips 
• Assist with implementing and record-keeping arrangements to track leave taken and leave accrued outside of the payroll system.

The post Family and Domestic Violence Leave extends to employees working for small businesses appeared first on SW Accountants & Advisors.

Maintaining a close day-to-day involvement with your organisation, its performance and key stakeholders, we provide tangible value adds and alert you to critical issues as and when they arise.

Utilising cloud-based accounting software, tailored to your business and incorporating add-on software where required, we will automate processing and develop a fully integrated accounting system. This enables you to make decisions based on accurate, timely and valuable information.

Our full service outsourced finance function can be utilised as an alternative to establishing an in-house finance team, or on an as-needs basis for various operational and compliance needs:

• BAS/IAS lodgements
• bookkeeping
• management accounting
• payroll services
• personal taxes
• Registry and company secretarial services.

The post Outsourced services appeared first on SW Accountants & Advisors.

Maintaining a close day-to-day involvement with your organisation, its performance and key stakeholders, we provide tangible value adds and alert you to critical issues as and when they arise.

Utilising cloud-based accounting software, tailored to your business and incorporating add-on software where required, we will automate processing and develop a fully integrated accounting system. This enables you to make decisions based on accurate, timely and valuable information.

Our full service outsourced finance function can be utilised as an alternative to establishing an in-house finance team, or on an as-needs basis for various operational and compliance needs:

• BAS/IAS lodgements
• bookkeeping
• management accounting
• payroll services
• personal taxes
• Registry and company secretarial services

The post Outsourced services appeared first on SW Accountants & Advisors.

On 1 July 2021 wage theft became a crime in Victoria.

The Wage Theft Bill 2020 creates new employee entitlement offences, comprising wage theft offences and new record keeping offences. It is designed to capture employers who falsify or fail to keep records for the purposes of concealing wage theft.

The key objective of the Bill is to ensure that employers who withhold employee entitlements dishonestly are held to account and protect vulnerable employees from exploitation.

The new law states that employers who dishonestly withhold wages, superannuation or other employee entitlements could be fined up to $198,264 for individuals, $991,320 for companies and be sentenced to up to 10 years’ jail.

As a director, you have a legal responsibility to ensure your company meets its Pay As You Go (PAYG) withholding and Superannuation Guarantee Charge (SGC) obligations. If the company does not meet these obligations, you may become personally liable for a penalty equal to these amounts.

Payroll health check

In light of these new laws and given the number of organisations that have been publicly identified to have underpaid employees we urge all businesses to undertake a payroll health check. The health check will ensure that all entitlements, including superannuation, are accurately determined and paid in compliance with the current ATO requirements to avoid any penalties.

• Underpayments to casual and permanent staff for ordinary pay, overtime and leave loading
• Inconsistencies and incorrect interpretation and payment of payroll entitlements under various Awards
• Underpayment of Superannuation entitlements.

What is the impact?

Financial risks

• Underpayment to employees
• Payroll tax underpayment
• Superannuation underpayment
• WorkCover underpayment
• Annual leave loading underpayment
• Penalties arising from underpayments

Reputation risks

• Staff morale
• Community expectations
• Adverse media attention
• Criminal prosecution

Opportunity

• Self report to avoid potential financial and/or criminal actions
• Meet your social and legal obligations to act in the best interests of your employees
• Be able to potentially claim a corporate tax deduction for the payment of underpaid superannuation
• Receive a reduction of potential penalties that can be up to 200% of the total underpaid superannuation.

Get in touch

Through the use of sophisticated data analytics and a review of your current awards, enterprise agreements and payroll processes, SW can assist you to manage your organisation’s payroll and superannuation risks efficiently, as well as identifying potential savings opportunities.

We use our customised data analytics tool to review your payroll records to identify any shortfalls or disclosure concerns.

Rest assured that whilst the Government’s social distancing guidelines are in force, we are able to assist you remotely during this period and are able to provide the full benefits of these services.

Reach out to one of our SW experts below to discuss how we can support you.

 Contacts

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