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A recent case involving the former director of a now-liquidated IT company has reignited the spotlight on wage compliance, and it serves as a serious warning for SME owners across Australia.
$150K in Alleged Underpayments Lands Director in Hot Water
David Blumentals, the former sole director of IT services provider D365 Group, is now facing legal action after allegedly underpaying 16 employees a total of $149,240. The Fair Work Ombudsman (FWO) has alleged that the company failed to pay accrued annual leave and final wages to workers after their employment ended, with individual underpayments ranging from $4,581 to nearly $24,000.
Of particular concern is that seven of the affected workers were visa holders, a group frequently recognised as vulnerable in the workplace. The company went into liquidation in 2023, but that hasn’t shielded Blumentals from personal accountability.
The case highlights the FWO’s sharpened focus on holding individuals responsible, especially when businesses close down.
“We will continue to take court actions to help employees and to seek penalties to deter breaches,” said Fair Work Ombudsman Anna Booth.
Legal and Financial Consequences for Directors
As the sole director, shareholder, and company secretary, Blumentals is alleged to have been an accessory to the company’s breaches. He now faces potential penalties of up to $13,320 per contravention, along with a personal repayment order for the full underpayment amount, plus interest.
With a court date set for 15 September 2025 in Sydney, this case stands as a powerful reminder: employers and directors remain personally liable even after company liquidation.
And as of 1 January 2025, intentional wage underpayment has been criminalised, making the stakes even higher for SMEs.
The Compliance Warning for SMEs
This case sends a crystal-clear message to small and medium-sized business owners: compliance is not optional, even in difficult times. The excuse of financial strain, insolvency, or lack of oversight won’t stand up in court.
SMEs should prioritise the following immediately:
- Review payroll and leave entitlements regularly
- Ensure final payouts (including leave) are correctly calculated
- Use digital tools or accounting software to automate and track obligations
- Engage qualified advisors or HR consultants for guidance
- Pay special attention to the rights of visa holders and vulnerable staff
Fair Work’s Anna Booth emphasised that personal accountability is here to stay, stating that public interest in pursuing enforcement action remains high.
“There is a strong public interest in demonstrating our commitment to taking enforcement action to ensure individuals are held to account for alleged involvement in significant employee underpayments.”
Enforcement on the Rise
In the 2023–24 financial year alone, the FWO launched 43 legal proceedings, recovering over $1.9 million in penalties against individuals, including directors and business owners. Their targeted efforts have also seen 147 litigations involving visa holders, collecting nearly $23 million in penalties over the past seven years.
Final Word for SME Owners
If you run a small business, now is the time to tighten your systems, seek advice, and ensure your payroll practices are above board. The cost of non-compliance isn’t just financial; it can damage your reputation, your future opportunities, and your ability to lead any business down the line.
Fair Work is watching, and enforcement is only ramping up.
