Most of the coverage of this case focuses on the sacking. A worker’s lawyer sent a complaint letter on a Friday. The business sacked her on the Sunday. The court joined the dots.
But the sacking was the last mistake, not the first. The real problem started three months earlier, when the business quietly cut her pay.
If you run a small business and money’s tight, this is the part worth reading.
What Happened
Hybrid PG runs a commercial laundry in Mascot, Sydney. A part-time worker started in August 2022. About a month later, the business cut her pay across the board. Her take-home pay dropped from $561 a week to $467. The super she’d been promised wasn’t paid.
In early December, her lawyer wrote to the business. Two days later, the director signed her termination letter.
In May v Hybrid PG Pty Ltd (No 2) [2026] FedCFamC2G 2168, the Federal Circuit and Family Court found the business had taken adverse action against her. In November 2026, it ordered penalties of $84,620 (as reported by HRD Australia):
| Who | What for | Penalty |
|---|---|---|
| The company | Adverse action (sacking her after the complaint) | $42,900 |
| The company | Underpayment | $16,531 |
| The company | Unpaid super | $16,531 |
| The director, personally | Involvement in the breaches | $8,658 |
Her compensation came to $8,853. The penalties were nearly ten times that.
The court also found she probably would have left by February 2023 anyway, because she couldn’t work the new afternoon and evening shifts. That limited her lost wages to about eight weeks. In other words, the business might have parted ways with her lawfully a couple of months later. It ended up paying for doing it the wrong way.
The business has appealed the court’s finding on liability, so treat this as the court’s decision so far, not the final word.
Why the Pay Cut Was the Real Mistake
Picture the chain of events without the pay cut.
There’s no underpayment. There’s no unpaid super. There’s no lawyer’s letter. And with no complaint on the table, there’s no adverse action claim when the role changes.
The pay cut created the grievance. The grievance created the complaint. And the complaint turned a routine exit into an $84K problem.
This pattern comes up all the time in SMEs. Cash gets tight, so the owner trims wages, delays super or quietly changes someone’s hours, and hopes nobody notices. Usually somebody does. When they push back, the owner feels attacked and reacts. That reaction is where the expensive bit happens.
Can You Cut an Employee’s Pay Without Their Consent?
In most cases, no. If you’ve agreed a rate of pay in a contract, you generally can’t reduce it without the employee’s agreement. You can never pay below the minimum set by the relevant award or enterprise agreement, whatever anyone agrees.
There are lawful ways to reduce wage costs. Each one has rules and needs checking against your award and the contract:
- Agree the change in writing. It has to be genuine agreement, not a choice between “sign or leave”.
- Change hours properly. Many awards set out consultation steps before you change rosters or hours.
- Look at stand-down. The Fair Work Act only allows this in narrow situations, such as when there’s no useful work because of something outside your control. Slow trading isn’t enough.
- Consider redundancy. If a role isn’t needed any more, follow a proper process with consultation and the correct entitlements.
If none of these fit, the honest answer may be that the business can’t afford the role as it stands. That’s a hard conversation, but it’s far easier than this one.
What Adverse Action Means in Plain English
Employees have “workplace rights”. These include the right to raise a complaint or inquiry about their employment, for example about their pay.
If you take action against someone because they used one of those rights, that can be adverse action. Sacking them, cutting their hours or changing their role to their disadvantage can all count.
The catch for employers is that once a claim is made, the employer usually has to prove the action wasn’t taken because of the complaint. If the timing looks bad, that’s very hard to do. Two days is very bad timing.
Directors Are on the Hook Too
The director in this case was fined personally. The Fair Work Act lets courts penalise people who are “involved in” a breach, not just the company.
For small business owners, that’s a big deal. You can’t assume the company structure protects you if you signed the letter, made the call or knew about the underpayment.
How It Made Things Worse
Neither the company nor the director turned up to the penalty hearing. The court described their approach to their obligations as “markedly casual” and found no sign of remorse. The business had asked for the penalties to be capped and suspended if it paid $648.28. The court refused.
Courts look at how you behave after a breach as well as the breach itself. Ignoring the process rarely makes it go away.
What to Do Instead
When Money’s Tight
- Work out the real numbers before you touch anyone’s pay.
- Check the award and each employment contract.
- Talk to your people early. Many will agree to a temporary change if you explain it honestly and put it in writing.
- Get advice before you change pay, hours or super.
When a Complaint Lands
- Pause. Don’t decide anything about that employee for now.
- Acknowledge the complaint in writing and look into it properly.
- Keep any performance or restructure issues separate, and check they’re documented and existed before the complaint.
- Get advice before you take any action that affects them.
The Bottom Line
The expensive mistakes rarely happen on the day of the sacking. They happen months earlier, when someone decides to quietly fix a cash problem out of an employee’s pay.
If you’re under pressure on wages, there are lawful options. We’ll help you work out which one fits your business.
Need to reduce wage costs, or dealing with a complaint right now? Talk to HR Gurus before you act.
Frequently Asked Questions
Can I reduce an employee’s pay if business is slow?
Not without their genuine agreement, and never below the award or agreement minimum. Look at lawful options such as agreed reductions in hours, or redundancy if the role isn’t needed. Get advice first.
What is adverse action under the Fair Work Act?
It’s when an employer takes action against an employee, such as dismissing them, because they used a workplace right, such as raising a complaint about pay.
Can a director be personally fined for underpayments?
Yes. Under the Fair Work Act, people who are “involved in” a breach can be penalised personally, as the director was in this case.
This article is general information only and isn’t legal advice. Your award, agreement and contracts will change the answer, so get in touch with HR Gurus for advice on your situation.