Fair Work Ombudsman v New Switch Electrical Pty Ltd (Appeal) [2026] FCA 415

Fair Work Ombudsman v New Switch Electrical Pty Ltd (Appeal) [2026] FCA 415 is a Federal Court appeal about what remedies are available when an employer fails to comply with a Fair Work compliance notice. The underlying dispute involved alleged underpayments of award wages, accrued annual leave and related superannuation obligations. The employer and its sole director did not participate in the lower court proceeding and did not appear on the appeal.

The key point from the published reasons is that the Federal Court held the lower court had taken too narrow a view of its powers. On those reasons, the Court accepted that the employee's loss was caused not only by the original award and National Employment Standards contraventions, but also by the later failure to comply with the compliance notice. That opened the way for relief substantially in the terms sought by the Fair Work Ombudsman.

New Switch Electrical Pty Ltd operated an electrical business. Its sole director was Mr Tan. The Fair Work Ombudsman investigated the company's compliance with workplace laws and, according to the allegations summarised in the appeal reasons, a Fair Work Inspector formed a reasonable belief that an employee, Anh Tuan Do, had not been paid correctly during employment from 9 August 2021 to 28 September 2022.

The alleged problems were not limited to one payroll line item. The inspector believed New Switch had not paid the employee in accordance with the Electrical, Electronic and Communications Contracting Award 2020 and had not paid the employee on account of accrued but untaken annual leave when the employment ended. The notice also dealt with additional superannuation contributions said to be required in respect of the underpayments.

Instead of the matter proceeding immediately as a standard underpayment claim, the inspector issued a compliance notice under s 716(2) of the Fair Work Act. That notice required the company to remedy the direct effects of the contraventions. The required steps included calculating and paying the outstanding amounts, calculating and paying additional superannuation contributions, making records of the amounts calculated and paid, and producing evidence showing compliance.

This is commercially important because it shows what a compliance notice can look like in practice. It may require more than simply transferring money. It can also require calculations, records and proof. A business that focuses only on the payment amount and ignores the documentary steps may still fail to comply.

The Fair Work Ombudsman alleged that New Switch did not comply with the notice and therefore contravened s 716(5). It also alleged that Mr Tan had actual knowledge of the notice and intentionally participated in the company's failure to comply, making him liable as a person involved in the contravention under s 550.

The amounts identified in the statement of claim were $1,157.48 gross for the employee's all-purpose rate entitlement and $3,653.08 gross for accrued leave, totalling $4,810.56, plus superannuation. Those figures were not large by commercial litigation standards, but the case demonstrates that a small payroll shortfall can still produce serious enforcement consequences once a regulator notice is ignored.

The respondents did not defend the proceeding below. The lower court entered default judgment, made declarations and later imposed penalties. New Switch was ordered to pay a penalty of $24,750 and Mr Tan was ordered to pay a penalty of $4,950. However, the lower court declined to make the compensation-style orders sought by the Fair Work Ombudsman in the terms requested. Instead, it ordered New Switch to take the steps required by the compliance notice without identifying the claimed sums as amounts to be paid.

That narrower approach to relief is what led to the appeal. So the real commercial story is not just that an employee was allegedly underpaid. It is that an employer allegedly underpaid, received a formal notice telling it how to fix the issue, failed to act, did not participate in the court process, and then faced an appeal about whether the court could go further and make payment-focused orders.

The main legal issue was whether, after a contravention of s 716(5) by failing to comply with a compliance notice, the court had power under s 545(1) of the Fair Work Act to make compensation-style orders requiring payment of specified amounts linked to unpaid wages, annual leave and superannuation. The lower court had held that it did not have that power in the terms sought by the Fair Work Ombudsman.

The lower court's reasoning, as summarised in the appeal reasons, drew a distinction between the original obligation to pay employees correctly under workplace laws and the later obligation to comply with a compliance notice. On that approach, the employee's monetary loss had already crystallised when the original underpayment occurred. The later failure to comply with the notice was said to cause only a lost opportunity to have entitlements reviewed and redressed, not the underlying monetary loss itself.

That distinction mattered because it affected the kind of orders the court thought it could make. The lower court accepted it could order the employer to take the steps required by the notice, which is closer to enforcing the notice itself. But it declined to make the compensation orders sought in terms that identified the amounts and required payment in the way the Fair Work Ombudsman requested.

The appeal therefore raised a practical question with real consequences for employers: if a business ignores a compliance notice that required it to calculate and pay employee entitlements, can the court later order payment of those identified amounts as compensation-style relief, or is the court confined to declarations, penalties and a more limited order to perform the notice steps?

There was also a threshold procedural issue about whether leave to appeal was required because the lower court orders had been made in default. Wheelahan J noted that leave was sought orally to the extent necessary and granted. For business readers, that point is less important than the substantive issue, but it does show that even default judgments can generate complex appellate questions and are not necessarily the end of the matter.

On the published reasons, Wheelahan J held that the primary judge erred in deciding the court lacked power to make the compensation orders sought. The catchwords and reasons state that the contraventions of the applicable Award and the National Employment Standards, together with the subsequent failure to comply with the notice, were concurrent causes of the employee's loss. The reasons also state that, had New Switch taken the action specified in the notice, the employee would have been paid the specified amounts.

That is the central point of principle. The Federal Court did not accept the narrower view that the failure to comply with the notice caused only a lost opportunity and not the employee's monetary loss. Instead, the failure to comply with the notice was treated as part of the causal chain that left the employee unpaid.

The reasons further state that the Fair Work Ombudsman was entitled to relief substantially in the terms sought. That language is important, but it should be read carefully. The Court's published orders on the material available here did not set out the final entered relief in full. Rather, the Court ordered that, to the extent necessary, leave to appeal be granted and directed the appellant to provide by 4.00 pm on 17 April 2026 a minute of proposed orders and submissions addressing the form of orders.

So the appeal succeeded on the key legal point, but the exact final form of the orders should still be checked before anyone relies on the case for the precise wording of relief, any interest component, or the final payment mechanics.

The case also confirms that non-participation does not shield an employer from meaningful outcomes. The respondents did not appear below or on appeal. Even so, the lower court made declarations and imposed penalties, and the regulator pursued an appeal to obtain broader relief. For businesses, that is a reminder that silence can increase risk rather than contain it.

The first practical lesson is escalation. A payroll issue may begin as an award classification problem, an all-purpose rate issue, a leave calculation error or a superannuation shortfall. If it is not fixed early, it can become a regulator investigation. If a compliance notice is then issued and ignored, the matter can escalate again into court proceedings involving declarations, penalties and payment-focused orders.

This case is a good example of that escalation path. The alleged underpayment amount was modest. But once the notice was not complied with and the respondents did not engage with the litigation, the matter became a Federal Court appeal about the scope of the court's remedial powers.

The second lesson is that a compliance notice may impose several different obligations at once. In this matter, the notice required calculations, payment of outstanding amounts, payment of additional superannuation, creation of records and production of evidence. Businesses should map each requirement separately and assign responsibility for each one. A payment made without records, or records created without proof of payment, may still leave the business exposed.

That means your internal response should usually include payroll, finance and management, not just one person in HR or administration. If the business uses an external bookkeeper or payroll provider, they should be brought in immediately and given the exact wording of the notice.

The third lesson concerns directors and managers. The judgment records allegations that Mr Tan, as sole director, had actual knowledge of the notice and intentionally participated in the company's failure to comply. In a small business, the same person often controls payroll, correspondence and legal decisions. That can make it easier for a regulator to allege personal involvement if the business does nothing after receiving a notice.

Directors should therefore assume that regulator correspondence addressed to the company may still have personal consequences if they knowingly decide not to act. Good governance in this setting means documenting who reviewed the notice, what advice was obtained, what calculations were done and what payments or responses were made.

The fourth lesson is procedural. Default is not a strategy. The lower court can make orders in the absence of the respondents if the procedural requirements are met, and the regulator may still seek broader relief on appeal. If your business disputes the notice, the safer course is to engage, file the necessary documents, preserve records and obtain advice on whether the notice should be complied with, challenged or addressed through urgent correspondence.

Even where the business believes the inspector's view is wrong, ignoring the notice is risky. A court may later focus not only on the original payroll dispute but also on the separate failure to comply with the notice itself.

One useful feature of this case is that it shows how documents and conduct interact. The compliance notice itself mattered because it specified the remedial steps the employer had to take. The statement of claim mattered because it identified the amounts the Fair Work Ombudsman said would have been paid if the notice had been complied with. The respondents' conduct mattered because they failed to file the required documents, failed to appear at directions hearings and failed to defend the proceeding with due diligence.

That combination of documents and conduct shaped the litigation. The lower court was prepared to enter default judgment, make declarations and impose penalties. The appeal then turned on whether the court's powers extended further to compensation-style relief in the circumstances.

For businesses, the practical point is that compliance is usually proved or disproved through records. If a notice requires calculations, records and proof of payment, your business should be able to show each step clearly. If you have paid an employee but cannot prove it, or if you have done calculations but not paid the resulting amount, you may still have a problem. Likewise, if you disagree with the notice, your objection should be documented and supported by records rather than left unstated.

The case also shows that the court will look closely at causation when deciding remedies. Here, the Federal Court treated the original underpayment contraventions and the later failure to comply with the notice as concurrent causes of the employee's loss. That approach can support broader relief than an employer might expect if it assumes the notice breach is merely procedural.

The appeal judgment was delivered on 10 April 2026. The published orders available here granted leave to appeal to the extent necessary and required the appellant to provide a minute of proposed orders and submissions on the form of orders by 17 April 2026. That means the reasons clearly indicate success on the main legal issue, but the final entered orders should still be checked before relying on the exact relief granted.

Readers should therefore use this case for the principle it establishes about court power and causation in compliance notice proceedings, while confirming the final sealed orders for the precise operative outcome.