A Sydney accounting firm has been ordered to pay $148,000 after a Federal Circuit and Family Court found it deliberately underpaid an employee and used a payment arrangement that made it appear she had received her wages.
Innovative Associates and its sole director had already admitted the breaches before the court determined the penalties on 27 August 2026. The director was separately ordered to pay $29,000 within 28 days.
The case highlights the personal risks for directors and managers who are knowingly involved in workplace underpayments, as well as the importance of accurate payroll records and payslips, as per HRD report.
Worker was allegedly paid through a ‘cashback’ scheme
The employee worked as an assistant accountant at the firm between July 2019 and December 2020. She held a temporary graduate visa and a bachelor’s degree in accounting.
According to the agreed facts, she was not paid during the initial period of her employment. The firm then used what was described as a “cashback” arrangement, under which the employee was required to pay money to the director or the firm.
The money was subsequently transferred through a company account and paid back to the employee, creating the appearance that she had received her wages.
The court found that the arrangement was designed to make it appear the employee was being paid when she was not.
False payslips added to the compliance failures
The firm provided the employee with 14 payslips that the court found were false or misleading.
The payslips showed the same monthly net payment despite variations in hours worked, while most listed payment dates did not match when the money was actually transferred.
The firm later provided the payslips to a Fair Work Inspector during an investigation that began in June 2021.
The court found the firm had provided documents to the regulator that it knew were false or misleading.
Underpayment totalled more than $40,000
The employee was underpaid $40,164.49, which was eventually repaid in instalments between June 2023 and July 2025.
While the court acknowledged that the money had been repaid, it considered the delay in repayment and the false documents provided during the investigation when determining the penalty.
The admitted breaches included failing to keep proper employment records, providing payslips late, issuing false or misleading payslips, failing to pay wages in full and at least monthly, underpaying the minimum wage and failing to pay public holiday and annual leave entitlements.
The firm also admitted to unreasonably requiring the employee to pay money for the benefit of the business.
Director personally penalised
The court ordered Innovative Associates to pay $148,000 in eight monthly instalments of $18,500.
Its sole director, secretary and shareholder was separately ordered to pay $29,000.
The court found the conduct was deliberate and held the director responsible for his involvement in the company's breaches.
The case reinforces that workplace underpayment can create personal financial exposure for directors and managers, rather than being treated solely as a corporate liability.
Payroll records remain a critical safeguard
The case also highlights the importance of maintaining accurate employment and payroll records.
Because the firm had failed to keep proper records, the legal burden shifted to the employer to disprove the alleged underpayments.
For HR and payroll teams, the ruling serves as a reminder that accurate records, genuine payslips and timely wage payments are fundamental compliance requirements.
Repaying underpaid wages does not necessarily remove the consequences of the original breaches, particularly where employers have delayed repayment or provided inaccurate information to regulators.