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A popular holiday spot and a ‘working holiday’ destination for some, Hamilton Island in Queensland has been found by the Fair Work Ombudsman (FWO) to have underpaid thousands of workers for years. The island is largely managed by Hamilton Island Enterprises Limited (HIE) and its subsidiary, Hamilton Island Shared Services Pty Ltd (HISS), which oversee nearly all operations, from hotels and restaurants to the airport and marina. Following a FWO investigation, HIE and HISS have been ordered to repay over $28 million in wages and superannuation and signed an Enforceable Undertaking (EU) with the FWO.
Here’s What Happened
The FWO launched the investigation in 2020 after receiving 51 requests for assistance from staff. The underpayments primarily stemmed from annual salary arrangements that failed to cover entitlements for overtime, shift work, and penalty rates.
The investigation revealed that 2,152 current and former employees were underpaid between December 2014 and December 2022. Employees affected were covered by more than 20 modern awards, including those in road transport, construction, and manufacturing. Some of the affected roles included food and beverage supervisors, assistant restaurant managers, front office staff, clerical workers, housekeepers, and handymen.
With little to no alternative employers on the island, many workers had no choice but to possibly accept the conditions offered. One expert put it bluntly:
"If you want to get a job on Hamilton Island, you're dealing with one company. They can essentially say, 'Here are the conditions—take them or leave them.’"
While more experienced workers might have had some negotiating room, unskilled employees, younger workers, and those on temporary visas were particularly vulnerable to underpayment.
Payments and Penalties
As part of the Enforceable Undertaking with the FWO, Hamilton Island companies have back-paid staff more than $28.1 million, which includes $6 million in interest and $500,000 in superannuation. An additional $250,984 (plus $10,954 in super) is owed to 32 former employees who haven’t yet been located.
The back-payments range from less than $5 to $119,446, with an average repayment of around $8,000 per person.
In addition to repaying wages, the companies must also make a $750,000 contrition payment, $500,000 to the Commonwealth Consolidated Revenue Fund and $250,000 to the not-for-profit Cleaning Accountability Framework.
Workplace Relations Training and Compliance Measures
The EU also requires HIE and HISS to implement workplace relations training and compliance measures to prevent future breaches. The training will be for staff responsible for HR, payroll, recruitment, and management of staff. The training will focus on key areas like record-keeping and compliance, and how to correctly apply annualised wage provisions. Both new and existing employees must complete this training, and it will be a mandatory part of the onboarding process.
Fair Work Ombudsman, Anna Booth, said that underpayments due to incorrect salary arrangements are an ongoing issue among businesses of all sizes across many industries. Highlighting the power imbalance between employers and employees, especially in isolated work environments where a single company dominates job opportunities.
This ongoing issue with annualised salary arrangements also highlights the general lack of understanding in this space.
A Lesson for Employers
For businesses operating in heavy industry, transport, construction, or manufacturing, this case highlights the critical need for payroll accuracy and compliance with modern awards. Complex rosters, shift work, and penalty rates must be accounted for.
Underpayment issues can be costly, not just in dollars, but in reputation and employee trust.
This case is a strong reminder especially for businesses in remote or controlled job markets, to review pay structures, ensure compliance with modern awards, and invest in training for HR, payroll, and leadership teams.
As HR consultants, we know wage compliance is a major issue across Australia. The FWO’s enforcement efforts make one thing clear – businesses must prioritise getting it right.
Get in touch with our team today to discuss how we can help.
Quick Guide to Understanding Wage Theft and Underpayments
CBA have been fined over $10 million for underpaying employees and wage theft will soon become a criminal offence. Employers cannot be blasé about their payroll practices anymore, and our latest Quick Guide to understanding Wage Theft and Underpayments will help get you on track.
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