Australian businesses that rely on casual, seasonal, or on-hire labour are facing a new level of scrutiny. And the message from the government is clear; the days of flying under the radar are over.

Last year, a Horticulture Compliance Report was released by the Fair Work Ombudsman, with the aim to improve compliance in Australia’s horticultural sector. At this time a softer approach was employed, with the FWO visited regions including Sunraysia to conduct inspections while also taking the time to educate employers. Now the approach has become more punitive.

How are government agencies working together?

Across the country, government agencies are working together in ways that would have been unusual just a few years ago. The Australian Taxation Office (ATO), Fair Work Ombudsman (FWO), Australian Federal Police (AFP), Department of Home Affairs, Australian Border Force (ABF), and in Victoria, the Labour Hire Authority (LHA) are all sharing intelligence, coordinating inspections, and targeting industries where non-compliance is most likely to be found.

The results are already being felt on the ground.

In South Australia's wine regions, the ATO, FWO and ABF conducted coordinated, unannounced inspections of vineyard owners and labour hire providers under Operation Zephyr, targeting unlawful practices by employers of seasonal vineyard workers. The focus was on wages, record-keeping, superannuation, tax, and immigration compliance all at once.

The food and hospitality sector has faced similar treatment. Operation Crimson saw the FWO and ATO conduct surprise inspections of around 25 Gold Coast eateries, checking compliance across pay, record-keeping, tax and superannuation obligations. The FWO has confirmed that this kind of multi-agency, surprise inspection model is now part of a sustained, long-term national campaign, not just a one-off exercise.

What areas of employment compliance are under scrutiny?

This new enforcement environment is distinguished by the wide scope of regulatory scrutiny. A single issue such as an underpaid casual worker or a missing right-to-work check, can quickly trigger scrutiny across tax obligations, migration status, superannuation, award coverage, and licensing.

Key areas being targeted include:

• Wage underpayment and entitlements. This includes base rates, penalty rates, leave entitlements, and loadings. Wage theft is a criminal offence under the Fair Work Act, and the FWO has a dedicated Criminal Investigations Branch. Identification occurs from a broad range of sources, included high risk targets, employee complaints and jobs ads.

• Sham Contracting. The ATO and FWO are jointly targeting sham contracting — where workers are deliberately misclassified as independent contractors to avoid paying entitlements such as super, leave, and workers' compensation. Industries under scrutiny include building and construction and road transport.

• Payslips & Record-Keeping. Regulators are pursuing employers for failure to provide compliant payslips, failure to maintain accurate employee records, and knowingly producing false or misleading records.

• Tax Obligations (PAYG Withholding). Investigators are targeting employers who fail to withhold and remit Pay As You Go (PAYG) withholding tax, as well as those incorrectly reporting business income and expenses and paying workers "off the books".

• Superannuation. Payday Super reforms scheduled for 1 July 2026 require superannuation to be paid within seven business days of wages. The ATO will impose mandatory penalties on employers who fail to pay superannuation in full and/or on time.

• Migration Status & Visa Compliance. The ABF is investigating breaches of obligations under the Migration Act, particularly where migrant workers are being exploited or where employers are misusing the visa system - work rights therefore must be verified, documented and monitored.

• Shadow Economy Activity. The ATO uses data analytics and intelligence sharing (including community tip-offs) to detect activity such as cash-in-hand payments and unreported income, particularly in hospitality and agriculture.

While not new, the way in which agencies are working together increases employer exposure.

What does your organisation need to consider?

Potential financial and criminal exposure is significant.

Depending on the non-compliance, employer liability can range from $19,800 to $99,000 per breach for standard workplace contraventions and up to $198,000 to $990,000 per breach for serious contraventions. Criminal wage theft fines are even higher, up to $1.65 million for individuals and $8.25 million for companies. Yet ATO penalties are also concerning as they are not capped but rather are calculated on up to 75% of unpaid PAYG.  Likewise, Superannuation penalties may be up to 200% of the Superannuation Guarantee Charge, plus backpay, interest, payroll tax reassessments, workers compensation exposure, director liability and, in serious cases, criminal prosecution and imprisonment.  

It is important to note here that even without financial penalties, employment non-compliance can lead to lower employee engagement and reputational harm that can have a substantial impact on the bottom line.

Yet despite these risks, many employers are not giving compliance the attention it deserves. For businesses using contingent or on-hire workforces, the question is no longer whether compliance matters, but whether you have the right support in place to manage it.

It starts with getting the right partner, one that holds a labour hire licence and ideally is ISO certified so you know they are audited externally. Bayside Group’s on-hire model is built with this reality in mind. Every placement we make is supported by rigorous right-to-work verification, award alignment, accurate payroll processing, and adherence to our licensing obligations under the Labour Hire Authority. These are not box-ticking exercises, they are the foundation of how we operate.

Beyond our own standards, our Workplace Relations team partners with clients to help them navigate the complexities of our employment laws. This may include award interpretation, payroll compliance reviews, contract assessments, workforce audits or advising on employee management issues when they arise.

Now more than ever, organisations need to identify employment risks before they become problems, and certainly before they become regulator problems.

Want to know how your workforce arrangements stack up? Contact Alan Doyle on 03 9864 6000 for a confidential compliance review, or learn more here.