Fair Work penalties went up 10.3% on 1 July 2026: what a venue is now exposed to

One penalty unit went from $330 to $364 on 1 July 2026. There was no press release and no transition period, and every maximum penalty in the Fair Work Act moved with it, because they're written in penalty units rather than dollars.

For a venue with 15 or more employees, the maximum civil penalty for a single underpayment contravention is now $546,000. In June it was $495,000. Nothing about the law changed. The price of breaking it did.

The short version: a Commonwealth penalty unit is $364 for conduct on or after 1 July 2026, up from $330. Fair Work Act penalties are set as multiples of that unit, so every maximum rose about 10.3% on the same day. Penalties are counted per contravention, not per investigation, and the single biggest variable for a venue is whether it has 15 employees or 14. This is general information, not legal advice.

What changed on 1 July, and what didn't

The value of a penalty unit is set by section 4AA of the Crimes Act 1914 and indexed to the CPI on a three-yearly cycle. 1 July 2026 was an indexation day. The Fair Work Act doesn't restate its penalties in dollars, it points at that unit, so the entire schedule repriced at once without a word of the Act being amended.

One detail worth pinning down: the value that applies is the one in force when the conduct happened, not when a court gets to it. AFSA publishes its penalty unit table under the heading 'date of offence', and the ATO's runs on 'when infringement occurred'. A wrong Sunday rate paid in 2025 is still priced at $330. The same mistake paid last week is priced at $364.

The new maximums, beside the old ones

The Fair Work Ombudsman publishes the right-hand column. The left is the same penalty unit counts at the old $330 value, which is how those figures read for conduct up to 30 June. Two things stand out. Indexation added about 10.3% across the board. And the gap between the two company rows is five times, which has nothing to do with indexation: that's the Closing Loopholes increase that has applied to businesses with 15 or more employees since 27 February 2024.

The number that decides which row you're on is 15

A small business employer is one with fewer than 15 employees at a particular time, and the counting rules are where venues get caught out. Employees of associated entities are included. Casuals are excluded unless they're engaged on a regular and systematic basis, which most rostered casuals in a functioning venue are.

So a café with nine permanents and six casuals who work most weeks is sitting at 15, and one wrong classification exposes it to $546,000 rather than $109,200 on the same contravention. Two extra casuals on the regular Saturday roster is a five-fold change in downside risk. Work out which side of that line you're on before you need to know.

Penalties are counted per contravention

This is the part that turns a modest underpayment into a headline number. One classification set wrong in 2023 isn't one contravention. Applied to eight staff across two years of Sundays it's a breach of the award, and quite possibly of record-keeping and pay slip obligations as well, and courts count those separately. Our rundown of the award mistakes that cost Sydney venues the most is a fair list of the errors that multiply this way.

In 2024-25 the operators of Sushi Bay outlets were ordered to pay $15.3 million for deliberately underpaying 163 workers more than $650,000. The penalty landed at roughly 23 times the money that went missing.

Where the three times multiplier actually bites

For a company with 15 or more employees, an underpayment contravention is capped at the greater of $546,000 or three times the underpayment. That reads as terrifying until you do the division. Three times only overtakes the flat cap once the underpayment on that contravention passes $182,000. Below that, the flat figure governs, and indexation has actually pushed the crossover point up from $165,000. Small business employers don't get the three times rule applied to them at all.

The criminal offence sitting behind the civil numbers

Since 1 January 2025, intentionally underpaying wages or entitlements can be a criminal offence. Honest mistakes aren't covered, and the Fair Work Ombudsman is explicit about that. Only the Commonwealth Director of Public Prosecutions and the AFP can start proceedings, with the FWO investigating and referring. These maximums moved on 1 July too.

The word carrying the weight there is intentional, and for most venues that's genuine reassurance. The catch sits on the civil side. Since 27 February 2024 a serious contravention no longer requires conduct that was knowing and systematic. Knowing or reckless is enough. Reckless is a materially lower bar than intentional, and it's the one that turns $546,000 into $5,460,000.

The protection worth reading before you need it

If you're a small business employer, the FWO can't refer you for criminal prosecution over an underpayment where it's satisfied you complied with the Voluntary Small Business Wage Compliance Code. It isn't a checklist and no single factor is decisive; the regulator looks at the overall picture and your particular circumstances. Civil penalties, compliance notices and enforceable undertakings can all still follow. These are the factors it weighs:

• Whether you took reasonable steps to work out correct rates and entitlements, which starts with confirming which award covers your venue.
• Whether you made reasonable effort to stay up to date with your obligations, including subscribing to FWO updates so July rate rises don't slip past.
• Whether you relied on employee information you reasonably believed was accurate, such as classification, duties and age.
• Whether you sought advice from a reliable source, and gave that source accurate information when you did.
• Whether you fixed the underpayment promptly and closed the gap that caused it.
• Whether you cooperated with any FWO inquiry or investigation.

Two practical notes sit underneath all of that. You have to keep time and wages records for 7 years, legible, in English and readily accessible to an inspector. And if you can't produce them and have no reasonable excuse, the burden of proof flips in a court wage claim: you have to disprove what the employee alleges. A compliance notice answered in a fortnight and one that becomes a court matter are usually the same notice sent to two venues with different record-keeping.

It's also worth knowing where the regulator is looking. Fast food, restaurants and cafés are a named priority sector for 2025-26, the FWO recovered $358 million for more than 249,000 workers in 2024-25, and anonymous tip-offs jumped 50% in a year to 25,608. Plenty of venues are found through proactive auditing rather than a complaint.

Where Shiftly fits

No rostering tool changes your legal exposure, and anyone claiming otherwise is selling something. What it can change is how fast you'd notice a wrong rate. Most of the underpayments the FWO finds in cafés and pubs aren't schemes, they're one classification set wrong two years ago that quietly multiplied across every Sunday since. Shiftly is free workforce management for Australian venues: rostering, GPS-verified timesheets and award-aware rate calculations, so you can check hours, breaks and rates shift by shift before payroll runs instead of reconstructing them years later. It's a calculation and record-keeping tool rather than a payroll service, and the FWO's Pay and Conditions Tool is still what you check the numbers against. It also fills the gaps: post an open shift and Shiftly's on-demand network offers it to nearby staff, so the roster fills itself instead of Saturday going uncovered. Get started with Shiftly.

Frequently asked questions

How much is a Commonwealth penalty unit in 2026?

$364 for conduct on or after 1 July 2026. It was $330 from 7 November 2024 to 30 June 2026, and $313 before that. The value is set by section 4AA of the Crimes Act 1914 and indexed to the CPI on a three-yearly cycle. The figure that matters is the one in force when the conduct happened, not when a penalty is imposed.

What is the maximum fine for underpaying staff in Australia?

It depends on the size of the business and how a court characterises the conduct. From 1 July 2026 the civil maximums per contravention are $21,840 for an individual, $109,200 for a company with fewer than 15 employees, and $546,000 for a company with 15 or more (or three times the underpayment, whichever is greater). Serious contraventions run at ten times those figures. Where the underpayment was intentional, criminal penalties reach $9.1 million for a company, and 10 years in prison for an individual.

Does the criminal wage theft offence apply to honest payroll mistakes?

No. The offence requires intentional conduct: deliberately paying below minimum entitlements, or deliberately not paying at all. The FWO's own example is an employer paying $12 an hour knowing it was below the minimum wage. Misreading an award or getting a classification wrong isn't in scope. Honest mistakes still attract civil penalties, back-pay, interest and superannuation though, and not knowing the applicable minimum rate doesn't excuse the underpayment.

Do these penalties apply to a small café with 10 staff?

Yes, at the smaller figures. A company with fewer than 15 employees faces up to $109,200 per contravention, or $1,092,000 for a serious contravention, and directors and managers can be pursued personally at up to $21,840 each. The three times the underpayment multiplier doesn't apply to small business employers. The counting is the thing to check: casuals engaged on a regular and systematic basis count towards the 15, so a venue that feels small can sit on the wrong side of the line.