Under the Fair Work Act 2009 (Cth) and the Protecting Worker Entitlements Act 2023 (Cth), civil penalties for underpayment reach $93,900 per contravention for companies. Each employee and each pay period can be treated as a separate contravention. For deliberate wage theft, criminal penalties can reach $7.825 million for companies and 10 years imprisonment for individuals.
These penalties are applied every year — including to small, single-venue operators. Most penalties don’t come from intentional wrongdoing. They come from small mistakes repeated every pay cycle.
Last reviewed against Fair Work Ombudsman guidance — April 2026
Civil penalty per contravention (individual): Up to $18,780
Civil penalty per contravention (company): Up to $93,900
Criminal wage theft (company): Up to $7,825,000
Criminal wage theft (individual): Up to 10 years imprisonment
Record-keeping breach: Up to $18,780 per contravention
These are not maximums that only apply in extreme cases. Civil penalties are actively imposed in hospitality for accidental underpayment.
The Full Penalty Framework
| Breach Type | Individual Penalty | Company Penalty |
|---|---|---|
| Underpayment of wages/penalty rates ★ Most Common | Up to $18,780 per contravention | Up to $93,900 per contravention |
| Failure to keep accurate records ★ Most Common | Up to $18,780 per contravention | Up to $93,900 per contravention |
| Failure to issue payslips | Up to $18,780 per contravention | Up to $93,900 per contravention |
| Failure to pay superannuation on time | ATO penalties separate | SGC + 10% pa interest + admin fee |
| Casual conversion breach | Up to $18,780 per contravention | Up to $93,900 per contravention |
| Deliberate wage theft (criminal) | Up to 10 years imprisonment | Up to $7,825,000 |
The contravention multiplier: A venue that underpays 8 employees across 52 weeks has 416 separate contraventions — even if the hourly underpayment was only $0.50/hr. At $93,900 per contravention, the theoretical maximum exposure is $39 million. Courts rarely apply the theoretical maximum — but they don’t need to. Even a fraction of this exposure is enough to materially impact a single venue. Back-pay of every dollar owed is required regardless of any penalty imposed.
What the Fair Work Ombudsman Actually Targets
Hospitality is a priority enforcement sector because the combination of casual employment, complex Awards, late-night hours, and high staff turnover creates conditions for systematic underpayment — often unintentional. These are the five areas that appear most frequently in audit findings.
1. Weekend & Public Holiday Penalty Rates
Applying Saturday rates on Sundays (175% instead of 150%) or Sunday rates on public holidays (250% instead of 175%) are among the most common findings. The dollar amounts compound quickly across a team. See our guide on Hospitality Award rates for 2026.
2. Evening Loadings Applied as Percentages
The $2.81/hr and $4.22/hr evening and night flat loadings are frequently misapplied as percentage multipliers — producing systematic underpayment that accumulates over years without anyone noticing.
3. Record-Keeping Failures
Missing or inaccurate time records — including using rostered times instead of actual start and finish times — are a separate contravention from underpayment. They also make it impossible to defend against back-pay claims, since the Ombudsman may rely on employee estimates where records are absent. See the Fair Work compliance checklist for hospitality.
4. Casual Conversion Obligations
Failing to offer or notify eligible casuals of their conversion rights after 12 months of regular and systematic work is a specific contravention — and each affected employee is a separate count. See our guide on casual conversion rules in hospitality.
5. Misclassification
Paying a Cook Grade 3 (Level 4) at Level 1 rates is underpayment at every shift, every week, for the entire employment. Classification errors are among the most financially significant findings because they compound over the full duration of employment and require back-pay for every affected shift.
You Don’t Need a Complaint for an Audit to Start
The Fair Work Ombudsman conducts proactive audits based on industry risk profiling — not just responding to employee complaints. Hospitality is consistently in their annual enforcement priorities. An audit can begin without any employee lodging a complaint. Being compliant is more important than being invisible.
When an audit begins, inspectors can request: employee records, time records, payslips, contracts, pay summaries, and superannuation records — going back 7 years. See the complete Fair Work compliance checklist for hospitality.
Criminal Wage Theft — When Penalties Escalate
Since the Protecting Worker Entitlements Act 2023 (Cth) introduced criminal wage theft provisions, deliberate or systematic underpayment is no longer just a civil matter. To attract criminal charges, the Ombudsman must prove the underpayment was intentional — but the threshold is lower than most employers expect.
Criminal prosecution in hospitality has been limited to large-scale systematic cases so far. But the provisions exist, they are being used, and the existence of criminal liability has significantly increased the Ombudsman’s leverage in civil enforcement proceedings.
Real Hospitality Cases — What It Looks Like in Practice
These are illustrative examples drawn from Fair Work Ombudsman enforcement outcomes in the hospitality sector. The Ombudsman publishes outcomes publicly — including the name of the business.
Frequently Asked Questions
What are the Fair Work fines for underpaying staff in hospitality?
Is hospitality a target for Fair Work audits?
Can I be fined even if I didn’t know I was underpaying?
What happens during a Fair Work audit?
What records does Fair Work require hospitality venues to keep?
Most venues that face Fair Work penalties are not trying to underpay their staff. They’re making calculation errors they don’t know about, keeping records they don’t know are inadequate, and applying Award provisions they don’t fully understand. By the time they find out, the liability is already years deep.
Find Out Where Your Exposure Is — Before Fair Work Does
Fitz HR answers any Award compliance question instantly — including penalty rates, record-keeping obligations, and casual conversion rules — before they become liabilities.
Check Your Compliance Free →