A seemingly small and simple section of the Fair Work Act 2009 (Cth) (FW Act) is having a big impact.  

Section 323(1) of the FW Act provides that an employee must be paid in full, in money, and at least monthly.   

FWO v Woolworths Group Limited & Ors 

The section was recently the subject of judicial consideration in Fair Work Ombudsman v Woolworths Group Limited, Fair Work Ombudsman v Coles Supermarkets Australia Pty Ltd; Baker v Woolworths Group Limited; Pabalan v Coles Supermarkets Australia Pty Ltd [2025] FCA 1092 (the Decision), in which underpayment proceedings were brought against Woolworths and Coles.  

Both Coles and Woolworths claimed that they had met their obligations under the General Industry Retail Award 2020 (the Award) because they made above award payments that would offset the award entitlements.  

The employers relied on employment contracts that provided to the effect that the agreed salary would be made in full satisfaction of all entitlements payable to the employee under any relevant industrial instrument. They argued that an above-award payment in one pay period could offset entitlements that accrued in a different pay period.  

Offset clauses are common, and the decision reaffirmed authority in Wardman v Macquarie Bank Ltd [2023] FCAFC 13 that a payment of wages can concurrently satisfy an employee’s contractual and award entitlements.  

However, in a potentially far-reaching decision, Perram J found that an above-award payment in one pay period could not offset the award obligations of another pay period.  

This was, in part, because of the requirement in s 323(1) that an employee be paid in full, and also because of further requirements in the Award to be paid fortnightly.  

The decision has potentially wide ramifications for many employers and provides further limitations on offset clauses, such that it may not be possible to offset entitlements within a defined pay period.  

Statutory claims for breach of contract?  

In a further development of the same section of the FW Act, it is increasingly likely that section 323 provides a statutory cause of action for underpayments arising from a non-payment of a contractual entitlement.  

In Australian Rail, Tram and Bus Industry Union v Pacific National Executive Services Pty Ltd [2025] NSWIC 3, the question whether s 323 imposes a statutory obligation to pay contractual amounts and whether there is therefore a corresponding civil penalty for a failure to pay arose in the context of an industrial action payment dispute.  

Considering apparent conflicting authorities on this issue, Justice Taylor ultimately followed a line of jurisprudence stemming from Murrihy v Betezy (2013) 238 IR 307, APESMA v Wollongong Coal [2014] FCA 878, and Euro Car Parts v Cannon (2024) 332 IR 456, in which the requirement of section 323(1) to pay an employee in full was found to create a statutory cause of action, and therefore triggers the corresponding civil remedy provision.  

This is a significant development for employees underpaid a contractual entitlement because it means that:  

• • Applicants may be able to receive civil penalties for non-payment of a contractual entitlement, which may make litigation more viable 

• • An Applicant may be able to initiate a claim in the Fair Work Division or other industrial court for breach of contract claims; and  

• • Applicants may also benefit from the costs protections afforded to claims initiated under the FW Act.  

Although greater certainty would follow an appellate or higher court decision on this matter, employers should be mindful of s 323(1) when offsetting or otherwise not paying an employee an agreed contractual entitlement.  

This article contains information only and is not intended to be taken as legal advice. Please contact Henry Bournes for specific advice. Liability limited by a scheme approved under Professional Standards Legislation.