Global Employer Services Update - October 2026

Global Employer Services update - Transcript

Aged care investigations recover $5.3 million for underpaid workers

The Fair Work Ombudsman recovered more than $5.3 million for nearly 3,600 underpaid direct care employees following investigations into 22 aged care providers. Of the businesses reviewed, 13 were found to be non-compliant, resulting in 16 Compliance Notices and back-payments across residential aged care and home care operations. Common issues included underpayments of minimum rates, overtime, broken shift entitlements and minimum engagement periods, often arising from incorrect employee classifications and payroll system errors. The Fair Work Ombudsman emphasised the importance of maintaining fit-for-purpose payroll and rostering systems and encouraged employers to undertake regular wage compliance reviews to identify and remediate issues before they escalate into significant back-pay liabilities.

AI drives increase in Fair Work claims

The growing use of generative AI is reportedly contributing to an increase in applications being lodged with the Fair Work Commission, particularly in relation to unfair dismissal, adverse action and workplace disputes. Workplace relations commentators have observed that AI tools are making it easier and more cost-effective for employees to prepare claim documentation, reducing barriers to commencing proceedings. In response to increasing caseloads and administrative pressures, calls have been made for the Fair Work Commission to adopt AI-enabled tools to assist with case management and administrative functions. Employers should continue to ensure workplace decisions are well documented, procedurally fair and supported by appropriate evidence, as greater accessibility to AI-assisted claim preparation may contribute to increased workplace litigation and dispute activity.

KPMG faces scrutiny over delayed redundancy payments

An article published in the Australian Financial Review reported that some former KPMG employees affected by the firm’s Project Vector redundancies had not received their final employment entitlements following the cessation of employment. According to the article, outstanding payments reportedly included redundancy pay, payment in lieu of notice, accrued annual leave and, for some employees, long service leave.
The article highlights the Fair Work Act requirement that employees must receive all amounts payable on termination when employment ends. Recent court decisions have reinforced the position that final entitlements are generally required to be paid on the employee’s last day of employment, with non-compliance potentially giving rise to civil penalties.
The reported issue was not that the entitlements were incorrectly calculated, but rather that they were not paid by the required time. The article notes that each affected employee may represent a separate breach of the Fair Work Act and references the Jewell v Magnium Australia decision, where penalties were imposed for late payment of termination entitlements.
From an employment tax and payroll governance perspective, the case serves as a reminder that employers undertaking restructures or large-scale redundancies should ensure payroll systems and processes are capable of accurately calculating and paying all final entitlements by the termination date.
 

 BHP faces class action over public holiday rosters 

BHP is facing a Federal Court class action backed by the Mining and Energy Union on behalf of up to 7,000 workers who allege they were required to work public holidays without first being asked whether they agreed to do so. The proceedings centre on the Fair Work Act requirement that employers request employees to work on a public holiday, rather than simply rostering them on. The case highlights the importance of ensuring employers can demonstrate that a genuine request was made and that employees had an opportunity to refuse. The outcome may have broader implications for employers that rely on automated rostering processes or standing roster arrangements covering public holidays. 

Director Penalty Notices under increased scrutiny

The Tax Ombudsman has launched a review into the ATO’s administration of Director Penalty Notices, following a significant increase in enforcement activity. More than 84,000 Director Penalty Notices were issued to directors of approximately 64,000 companies during the 2024-25 financial year, representing a 136% increase on the previous year. The review will examine whether the ATO’s approach is fair, effective and supported by appropriate safeguards, including the clarity of communications provided to directors and the treatment of vulnerable individuals, such as those affected by illness, coerced directorships or financial abuse. The review highlights the growing focus on director accountability for unpaid PAYG withholding, GST and superannuation liabilities.

Quy v FCT: Australian residency under the domicile test

In Quy v FCT [2026] FCA 1316, the Federal Court upheld a decision that the taxpayer remained an Australian tax resident under the domicile test, despite living and working overseas for several years. The taxpayer had worked full-time in Dubai since 2015, held UAE residency permits and lived in employer-provided accommodation. However, the Court found that he had not established a permanent place of abode outside Australia, noting that his spouse and children continued to reside in the family home in Perth, he maintained significant ties to Australia and he returned to Australia on multiple occasions during the relevant period. The Court confirmed that a permanent place of abode requires more than temporary or transitory overseas living arrangements and that an intention to live overseas indefinitely is not necessary. The decision reinforces that Australian tax residency remains a question of overall facts and circumstances, and employers should carefully assess residency, PAYG withholding and tax equalisation positions for internationally mobile employees.

Superannuation Guarantee: work arranged by intermediaries

The ATO has released Draft Superannuation Guarantee Ruling SGR 2026/D1, which updates guidance on identifying the employer in arrangements involving an end-user, intermediary and worker. The draft ruling aligns with recent High Court and Federal Court decisions and outlines the ATO’s approach to determining whether a worker is an employee under either the common law test or the extended employee provisions in section 12 of the Superannuation Guarantee (Administration) Act 1992. In particular, the ruling provides additional guidance on who bears Superannuation Guarantee obligations where workers are engaged through labour hire, recruitment, management service or contractor arrangements, and highlights that liabilities may arise even where a worker is not directly engaged by the end-user. Businesses using intermediary engagement models should review their arrangements carefully to ensure obligations are being met. The final ruling is intended to replace SGR 2005/2, although the Commissioner’s underlying view remains largely unchanged.

Employers face superannuation bill around portable long service leave

Recent commentary has highlighted potential Superannuation Guarantee implications for employers participating in portable long service leave schemes. The issue arises from the possibility that contributions made to portable leave funds may be characterised as ordinary time earnings, potentially triggering additional obligations. If this view were adopted more broadly, affected employers could face increased employment costs and historical superannuation liabilities. While the position remains uncertain, the issue is particularly relevant for industries that rely on portable long service leave schemes, including construction, contract cleaning and community services. Employers should monitor developments closely and consider reviewing current arrangements to assess any potential exposure.

FBT electric car exemption: proposed phased changes

The Treasury has released an exposure draft proposing to phase out the current FBT exemption for eligible electric vehicles and replace it with a concessional FBT regime. Under the proposal, vehicles acquired under commitments entered before 1 April 2027 may continue to access the existing exemption. From 1 April 2027, eligible electric vehicles may instead qualify for either a 100% or 25% FBT discount, depending on the vehicle’s value and the timing of the commitment. From 1 April 2029, eligible vehicles will generally only be entitled to a 25% FBT discount. The proposed changes may significantly impact salary packaging arrangements and employer fleet strategies, particularly where electric vehicles currently form part of remuneration packages.

ATO data-matching programs: the ATO’s data net keeps growing

The ATO has announced updates to two of its data-matching programs: share transactions and passenger movements. The share transactions program uses historical data collected from ASIC and Australian share registries covering transactions from 1985 to 2018. The ATO is not collecting new data under this program, but continues to use the existing information to verify tax obligations, including capital gains tax reporting.

The passenger movements program will obtain travel data from the Department of Home Affairs between 2026-27 and 2028-29. This includes arrival and departure dates, passport information and residency status. The ATO will use this data to identify tax and superannuation compliance risks, particularly around residency and eligibility for tax concessions.
From an Employee Share Scheme perspective, the impact is likely limited. Employee Share Scheme interests are already reported directly to the ATO by employers and plan administrators. However, these data sets could support ATO reviews where employees sell shares and fail to report capital gains, or where cross-border employees have complex residency and tax outcomes. Overall, these programs reinforce the ATO’s continued focus on data matching to improve compliance and identify reporting risks across the tax system.