The Hidden Risks of Misclassification in the Wake of Wage Increases
Topic: The critical importance of accurate award and level mapping in today's regulatory environment
Reference: Fair Work Commission's 3.5% minimum wage increase effective July 1, 2025
Context: Recent wage hikes underscore the necessity for precise role classification to avoid costly penalties.
With the Fair Work Commission announcing a 3.5% increase in the national minimum wage, effective July 1, 2025, organizations must reassess their compliance frameworks. While the wage increase aims to support workers amidst rising living costs, it also amplifies the repercussions for employers who misclassify roles or apply incorrect award levels.
Case in Point: Sushi Bay's $15.3 Million Penalty
A stark illustration of the consequences of misclassification is the case involving Sushi Bay, a restaurant chain that was fined a record $15.3 million for underpaying 163 employees over several years. The Federal Court found that the company, along with its director, engaged in deliberate underpayment and falsification of records, affecting predominantly young and migrant workers.
This case highlights how systemic misclassification and non-compliance can lead to severe financial and reputational damage.
The Risks of Incorrect Award and Level Mapping
Misclassifying roles or applying incorrect award levels can result in:
Underpayment of wages, leading to backpay liabilities and penalties
Legal action and fines from regulatory bodies like the Fair Work Ombudsman
Damage to brand reputation, affecting employee morale and customer trust
Increased scrutiny from unions and the public, especially in sectors with vulnerable workers
How Humello Can Help
At Humello, we understand the complexities of award interpretation and role classification. Our AI-driven Role Management System offers:
Accurate mapping of roles to the correct awards and levels based on actual job responsibilities
Flexibility to assess 1, 3, or 5 roles, allowing organizations to start small and scale as needed
Support for audits and BOOT tests, ensuring compliance with the Better Off Overall Test requirements
By leveraging advanced technology, Humello helps organizations mitigate risks associated with misclassification and stay ahead of regulatory changes.