Quick Answer
The cost of non-compliance is rarely a single fine. One safety, privacy or harassment incident can bring lost productivity, staff turnover, compensation claims, legal costs, damages and, at the serious end, prosecution. Maximum penalties have also risen sharply since this article was first written in 2016. This post covers the first of the seven common workplace compliance mistakes: underestimating what a worst-case scenario would cost. This is general information, not legal advice.
In this guide
So let’s start with a person you’ve probably heard a few of your work colleagues mumble about. After a ‘worst case scenario’ has played out.
Yes, that’s right. We’re talking about Murphy’s Law, which has become somewhat of a cliche when it comes to risk mitigation or conversations around ‘worst case scenarios’ in life and in the workplace.
Interestingly, most often, our colleagues talk to us about Mr Murphy after a ‘worst case scenario’ has played out. Why is that?
Most business owners, executives, and senior managers are so busy running the day-to-day activities of their business and serving our clients that we don’t always give the necessary attention to important things until they become urgent.
Unfortunately, when it comes to workplace compliance, for businesses that have not stopped to think about what the impacts would be in the event of a breach in safety, invasion of privacy, or incidents such as workplace bullying, sexual harassment or discrimination, the impacts can be an unpleasant surprise, to say the least.
The Cost of Non-Compliance for a Business
Likely impacts on your business in the event of a fair work, privacy or health and safety incident:
- Loss of productivity
- Decrease in staff morale
- Increased absenteeism and staff turnover
- Loss of reputation in the marketplace
- Workers compensation claims
- Increased insurance premiums
- Wasted time in mediation and legal hearings
- Remedies imposed by a court or tribunal
- High cost of damages
- In extreme cases, even criminal prosecution
Past Cases That Show the Consequences of Non-Compliance
To put it in perspective, let’s have a look at some past cases in the Australian workplace. They date from when this article was first written in 2016, and penalties have risen since, as the section on today’s costs explains.
Breaches of the Work Health and Safety Act could cost up to $3m in 2016, and can cost far more today
Directors convicted and fined $45,000 for Work Health & Safety breach on top of $90,000 fine imposed on the company
An employee in WA was tragically killed in a workplace accident when a pack of crane components slipped in the course of being lifted. The employer company and directors were prosecuted for breaching the OHS Act 1984 (WA) (Act) by failing to provide a safe workplace. The result was that the directors were slugged with a $45,000 fine on top of the $90,000 fine imposed on the company. Western Australia has since replaced that Act with the Work Health and Safety Act 2020 (WA), which commenced on 31 March 2022.
Do you provide your workers with a safe workplace?
Breaches of the Privacy Act could cost up to $1.7m in 2016, and can cost far more today
Privacy Legislation Update: $1.7 Million Civil Penalty for a Privacy Act Breach from March 2014
The Privacy Amendment Act 2012 (No. 197, 2012) was passed by the Australian Parliament and took effect on 12 March 2014. The new legislation introduces significant obligations for the protection of personal information held by Australian organisations, as well as material financial penalties.
Do your workers understand their obligations for the protection of personal information?
Incidents of bullying, sexual harassment and discrimination can lead to claims of legal liability against the employer.
Employers Beware: Sexual Harassment Damage Exceeds $330,000 in a 2015 VCAT Ruling.
In Collins v Smith (Human Rights) [2015] VCAT 1992 (23 December 2015), the Victorian Civil and Administrative Tribunal (VCAT) awarded the complainant in a sexual harassment case over $330,000 in damages. The decision continues the shift in approach to the assessment of damages for sexual harassment contraventions which was affirmed in Richardson v Oracle Corporation Australia Pty Ltd and Tucker(Oracle).
It also reminds employers of the need to take proactive steps towards a workplace free of bullying and harassment.
If there was an incident of bullying, sexual harassment or discrimination in your workplace, would your workers know how to identify, report and help resolve it?
What the Same Breaches Can Cost Today
The cases above come from 2014 and 2015. The penalties behind them, and with them the cost of non-compliance, have moved a long way since.
- Work health and safety: Under the Commonwealth WHS Act, the maximum penalty for a company convicted of a Category 1 offence, the most serious kind, rose to $16.63 million from 1 July 2024, and penalty amounts are now indexed each year (Comcare). Each state and territory sets its own maximums.
- Privacy: Since 13 December 2022, the maximum civil penalty for a serious interference with privacy by a company is the greater of $50 million, three times the benefit obtained, or 30% of adjusted turnover for the relevant period. In October 2025 the Federal Court ordered the first civil penalties under the Privacy Act, $5.8 million against Australian Clinical Labs, under the older and lower penalty regime (OAIC).
- Harassment and discrimination: Employers now have a positive duty under the Sex Discrimination Act to eliminate, as far as possible, workplace sexual harassment, sex discrimination, sexist conduct and related victimisation.
In a worst-case scenario, the cost of non-compliance is now far higher, which makes it more worthwhile to think that scenario through before it happens.
Unfortunately, for most businesses, incidents like those mentioned in this article play out when you least expect it.
Because, in today’s business environment, even if you are a good leader and you have a good workplace culture, just one incident from a rogue employee, who you wish you had never hired in the first place, can expose your business if you do not have the necessary protections in place.
That’s why, when it comes to planning for a ‘worst case scenario’ around workplace compliance in today’s business environment, it is important to back up your good leadership practice with a good dose of protection.
Frequently Asked Questions
1. Why is the cost of non-compliance so often underestimated?
Because most of it is indirect. Fines and damages are easy to picture, but management time, lost productivity, absenteeism, staff turnover and damage to your reputation rarely arrive as one invoice, so they get left out of the estimate. Maximum penalties have also risen, so figures people remember from a few years ago are often out of date.
2. How much can a company be fined for a serious WHS breach?
Under the Commonwealth WHS Act, the maximum for a company convicted of a Category 1 offence was $16.63 million from 1 July 2024, and the amount is indexed each year. States and territories set their own maximums, so the figure depends on where the work is done.
3. Can directors be personally fined for a workplace safety breach?
Yes. Under work health and safety laws, officers such as directors have a personal duty to exercise due diligence, and they can be prosecuted personally. The Western Australian case above, where directors were fined on top of the company, is an example.
Sources
Comcare, Penalty amounts indexation
OAIC, Australian Clinical Labs ordered to pay penalties in a first for the Privacy Act
Australian Human Rights Commission, Positive duty under the Sex Discrimination Act
Last reviewed: October 2026
Next in the series: Mistake #2: most businesses think that it won’t happen to me.
This article is general information only and is not legal advice. Penalties and obligations vary by state and territory and change over time, so seek advice from a qualified professional for your situation.
