The Smith Family Pays More Than $5.9 Million in Underpayments – Lessons for All Employers
Posted on March 27, 2026 by The HR Bridge Team
On 12 June 2026, The Smith Family entered into an Enforceable Undertaking with the Fair Work Ombudsman after underpaying 784 workers a total of more than $5.9 million (including interest and superannuation).
The national charity, which supports young people and families experiencing educational disadvantage, underpaid staff across its Sydney head office and operations in every state and territory over an eight-year period (2016–2024).
Affected employees included education program staff, managers, engagement advisors, and professional roles in marketing, accounting and HR. Individual back-payments ranged from $1 to more than $121,000, with an average of approximately $7,900 per person.
What Went Wrong
The Fair Work Ombudsman’s investigation found that The Smith Family did not have adequate systems to correctly identify which industrial instrument (Award or Enterprise Agreement) applied to its employees. This led to workers being paid below minimum rates and missing entitlements under both its Enterprise Agreement and the Social, Community, Home Care & Disability Services Industry Award 2010.
In other cases, the correct instrument was identified, but employees were incorrectly classified at lower levels than their duties, experience or qualifications required. A lack of regular reviews allowed the underpayments to continue for years. The organisation also failed to keep proper employment records.
Importantly, The Smith Family self-reported the issues after an internal review in 2023 and cooperated fully with the investigation. It has now rectified all identified underpayments.
Why This Matters for Other Employers
Fair Work Ombudsman Anna Booth noted that this case is a clear warning: “This matter serves as a warning of the significant long-running problems that can result from an employer failing to have adequate systems and checks-and-balances in place to ensure workers are receiving all lawful entitlements.”
Key risks highlighted include:
- Incorrect application of Awards or Enterprise Agreements
- Misclassification of employees
- Failure to conduct regular compliance reviews
- Inadequate record-keeping
Even well-intentioned organisations can face multi-million-dollar liabilities if systems are not robust.
Commitments Under the Enforceable Undertaking
As part of the undertaking, The Smith Family has agreed to:
- Commission an independent compliance audit
- Establish an internal forum for employee consultation on pay and conditions
- Provide six-monthly compliance reports to the Fair Work Ombudsman
- Implement an automated time-and-attendance system
Practical Takeaways for Businesses and Not-for-Profits
- Regularly review which Award or Agreement applies to each role.
- Check that classifications accurately reflect the work being performed, experience and qualifications.
- Conduct periodic payroll and classification audits — don’t wait for problems to surface.
- Maintain accurate employment records.
- If issues are identified, self-reporting and cooperating with the Fair Work Ombudsman can lead to a more constructive outcome (such as an Enforceable Undertaking rather than court penalties).
At HR Bridge Australia, we help organisations — including not-for-profits and SMEs — build the systems needed to stay compliant. From Award interpretation and classification reviews to payroll audits and ongoing compliance support, our focus is practical solutions that prevent costly underpayment issues.
If you would like a confidential review of your current Award coverage, classifications or payroll practices, we are here to assist.
