$887,690 versus $341,213.

Two employee costing models.

One was more than $500,000 cheaper.

Which one do you think the business chose?

The cheaper one.

There was just one fairly significant problem.

It didn’t include things such as casual loading and weekend penalty rates.

About 150 employees were subsequently underpaid more than $160,000.

The Managing Director’s response included that he didn’t know the model he approved would result in employees being underpaid.

He was still found personally liable.

Welcome to accessorial liability under the Fair Work Act 2009 (Cth).

And if you are a Director, CEO, CFO, General Manager or senior HR professional, this is something worth understanding.

Because employee underpayments are not always just the company’s problem.

Sometimes the Fair Work Ombudsman comes looking for the people behind the decisions as well.

The Chatime Case

The numbers above come from the Chatime litigation.

In Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 675, the Court considered the involvement of Chatime’s Managing Director in Award contraventions affecting its employees.

Years earlier, the Managing Director had attended a meeting where employee costs were discussed.

Two costing models were presented.

One included minimum Award rates, uniform allowances, casual loading and weekend penalties.

The other was considerably cheaper and excluded some of those entitlements.

The cheaper model was approved.

It ultimately contributed to Chatime underpaying 152 employees more than $160,000.

The Managing Director did not accept that he knew the cheaper model would breach the Modern Award.

In other words:

“I didn’t know it was unlawful.”

That didn’t end the matter.

The Court looked at what information had actually been put in front of him.

The costing models referred to Award rates, casual rates and weekend penalties.

The Court was prepared to infer that the Managing Director had sufficient knowledge of the relevant facts.

It was not necessary to establish that he understood the legal conclusion that choosing the cheaper model would breach the Award.

In the later penalty decision, Fair Work Ombudsman v Chatime Australia Pty Ltd (No 4) [2024] FedCFamC2G 1266:

Chatime was penalised $120,960.

And:

The Managing Director was personally penalised $11,880.

Now Put Yourself in the Boardroom

Imagine this happens next Monday.

The CFO presents two options.

Option A

Annual labour cost: $5.2 million

Option B

Annual labour cost: $4.5 million

Option B looks fantastic.

$700,000 straight to the bottom line.

Someone around the table should probably ask:

“Why is it $700,000 cheaper?”

And if the answer involves not paying certain penalties, allowances, overtime or loadings, the next question should not be about EBITDA.

It should be:

“Are we actually legally allowed to do that?”

That is where Chatime becomes much more than an employment law case.

It becomes a governance lesson.

Executives don’t need to know every clause of every Modern Award.

But deliberately remaining at 30,000 feet when the numbers underneath you don’t make sense isn’t much of a defence either.

Sometimes the number itself should make you ask another question.

So How Does Personal Liability Actually Work?

Section 550 of the Fair Work Act 2009 deals with what is commonly known as accessorial liability.

In broad terms, a person involved in a contravention can also be treated as having contravened the legislation.

That can include someone who aids, induces or is knowingly concerned in the contravention.

Potential exposure can extend to people involved in the conduct, including senior managers, HR professionals, accountants, consultants (both internal and external) and others.

Which takes us to another case.

And another fairly uncomfortable number.

$105,084 Personally Against a HR Coordinator

In Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 397, the Federal Court dealt with serious contraventions involving Din Tai Fung restaurants.

The case involved deliberate and systematic underpayments and false records.

The overall penalties were approximately $4 million.

But two numbers stand out for senior management:

Former General Manager: $92,232

Former HR Coordinator: $105,084

Personally.

That is why I don’t think accessorial liability should be viewed as something only company owners need to worry about.

A General Manager can be exposed.

An HR professional can be exposed.

A Director can be exposed.

Potentially, so can other people sufficiently involved in the contravention.

“But Payroll Handles That”

This is where things get interesting for CEOs and CFOs.

Ask most executives who is responsible for paying employees correctly and you will probably hear one of three answers:

Payroll.

HR.

Finance.

The problem is that in many organisations all three touch payroll.

HR deals with classifications, contracts and Awards.

Payroll processes the wages.

Finance watches labour costs.

The CFO watches the budget.

The CEO watches profitability.

The Board watches risk.

Everyone owns a piece.

Sometimes nobody owns the whole thing.

Then an employee asks why they haven’t been paid overtime for the last four years.

Suddenly everybody owns it.

A Payroll System Can Be 100% Accurate and Still Underpay Everyone

This is another misconception worth dealing with.

“Our payroll software calculates it automatically.”

Great.

But who told the software what to calculate?

If an employee should receive $42.70 per hour and the system has been programmed to pay $37.50, the software can perform its calculation perfectly.

Every fortnight.

For five years.

Across 200 employees.

That isn’t a software problem.

It is a very efficiently administered underpayment.

The same thing can happen with:

the wrong Modern Award;
incorrect classifications;
missing allowances;
incorrect overtime triggers;
weekend penalties;
public holiday rates;
casual loadings; or
salaries that don’t actually satisfy the underlying Award entitlements.

This is why I don’t think a CEO or CFO should be also be asking:

“How do we know the rules inside payroll are right?”

Then Came Fair Work Ombudsman v Blumentals (No 2) [2026] FedCFamC2G 937

If Chatime demonstrates how a Director can become personally liable, a 2026 case demonstrates how serious that exposure can become.

D365.Group Pty Ltd was an IT services company.

Between October 2021 and December 2022, 16 workers were underpaid a total of $148,812.

The underpayments included wages and accrued annual leave.

The company’s sole director and shareholder, David Mark Blumentals, was responsible for its day-to-day operations, including HR and payroll functions.

The Fair Work Ombudsman pursued him personally.

By then, however, the company had been placed into liquidation.

You might think that would substantially change the conversation.

It didn’t.

In 2026, the Court ordered Mr Blumentals to pay a personal penalty of:

$35,308.

But that wasn’t the number that caught my attention.

He was also ordered to personally rectify the $148,812 owed to the employees, plus interest.

The company was in liquidation.

The personal exposure remained.

This Wasn’t His First Rodeo

There was another important fact in the D365.Group proceedings.

A company previously controlled by Mr Blumentals had already been the subject of a 2019 Court ruling involving employee underpayments.

The Court found the later non-compliance deliberate and considered there was a strong need for deterrence.

The CFO Problem

In my view CFOs in particular should pay attention to where wage compliance now sits.

For years, payroll has often been treated primarily as a processing function.

Get everyone paid.

Get the superannuation right.

Reconcile payroll.

Report labour costs.

Move on.

But payroll is now sitting at the intersection of:

Finance + Employment Law + Governance + Risk.

That means CFOs don’t necessarily need to calculate Award entitlements themselves.

But they should want assurance that somebody competent has tested them.

Especially where the business:

employs large Award-covered workforces;
operates across multiple Awards;
uses annual salaries;
has significant overtime or shift work;
operates seven days a week;
has complicated rostering arrangements; or
hasn’t conducted a wage compliance review for years.

The bigger and more complicated the payroll, the less comfortable I would be with:

“We’ve always done it this way.”

Six Questions I Would Ask

If I was sitting around the executive table discussing wage compliance, I would want answers to these:

Which Modern Awards and enterprise agreements actually cover our employees?

Not which ones we think apply. Which ones have actually been checked. In practical terms I want to see legal advice confirming the coverage.

When did someone last independently test our payroll rules and classifications?

If nobody can remember, that tells you something.

Where are our biggest wage compliance risks?

Overtime? Salaries? Allowances? Shift penalties? Classifications?

Know where the complexity sits.

Do the hours employees actually work match what we are paying them?

Particularly where employees are salaried.

What happens when someone identifies a payroll error?

Do we fix one employee or investigate whether it is systemic?

If the Fair Work Ombudsman walked in tomorrow, how would we prove our employees are being paid correctly?

Actual evidence.

The Question Has Changed

For years, the executive question about payroll was:

“How much are we spending on wages?”

That question still matters.

But cases such as Chatime, Din Tai Fung and D365.Group suggest another question belongs beside it:

“How do we know those wages are correct?”

Let’s look at what has happened.

A Managing Director personally penalised.

A General Manager personally penalised.

An HR Coordinator personally penalised more than $105,000.

A Director ordered to personally rectify almost $150,000 in employee underpayments, plus interest.