Wage Theft Is Systematic in the MSP Industry
Wage theft in the IT industry — and specifically in MSPs — is not a matter of a few bad apples. It's structural.
The business model of managed services creates built-in pressure on wages:
- Fixed-price contracts mean every hour you work beyond the estimate is a cost, not revenue
- "All-you-can-eat" service models create unlimited demand on limited staff
- After-hours work is baked into the model (maintenance windows, patching, on-call)
- Competition drives MSPs to cut costs, and labour is their biggest cost
- Billable hour targets create incentives to work longer without recording those hours
The result: a significant portion of MSP workers are being paid less than the law requires.
This isn't an accident. It's by design.
The 5 Most Common Ways MSPs Underpay Their Workers
1. The "Annual Salary Trap"
How it works: Your contract states your salary of $80,000-95,000 "includes all award entitlements." You work 45-55 hours a week with regular on-call. At award rates including overtime penalties, your actual entitlement is $95,000-120,000.
Why it works: Most employees don't track their hours or understand award rates. They see a salary of $85,000 and think it's fair.
How to check: Track your actual hours for 4 weeks. Calculate what the award requires (see Professional Employees Award Guide). Compare.
2. Off-the-Clock Work
How it works: You check emails at 9 PM, answer Slack messages on weekends, take a "quick call" about a client issue, do 30 minutes of documentation after your shift. None of it goes on your timesheet.
How much it adds up: 30 minutes a day = 2.5 hours a week = 120 hours a year. At time-and-a-half that's $5,000-8,000 in unpaid overtime per year.
The reality: In most MSPs, off-the-clock work is normalised. "Just check this one thing" is the most expensive phrase in the industry.
3. Wrong Award Classification
How it works: You're doing Level 3/4 work but classified as Level 1 or 2. The difference between Level 1 and Level 3 minimum rates is ~$300/week or ~$15,000/year.
Who it affects most: Junior-to-mid engineers who've been promoted in responsibility but not in classification. You're doing senior work at junior pay.
4. Unpaid On-Call and After-Hours
How it works: You're on the on-call roster but receive no allowance. Or you're told "we don't have a formal on-call policy" but get called 3-4 times a week.
The award requires: On-call allowance of approximately $30-50 per day or $200-350 per week depending on the level of availability. Plus actual time worked at overtime rates.
What happens instead: Zero. Nothing. "It's part of the role."
5. Unpaid Travel Time
How it works: You travel between client sites (say 30-60 minutes each way, 2-3 times a week). Your MSP doesn't count this as work time.
How much: 2 hours/week travel time × 48 weeks = 96 hours a year. At ordinary rates that's ~$4,000-5,000 additional unpaid work per year.
The law: Travel between work sites during the work day is work time. Only travel from home to your first site and last site to home can be excluded.
The Real Numbers: What MSPs Actually Cost vs What They Pay
Here's the dirty secret of the MSP industry:
| Role | Billed to Client | Paid to Worker | Margin |
|---|---|---|---|
| L1 Helpdesk | $100-130/hr | $35-45/hr | 60-70% |
| L2 Engineer | $150-180/hr | $50-70/hr | 55-65% |
| L3/Senior Engineer | $180-220/hr | $70-90/hr | 55-65% |
| Solutions Architect | $220-280/hr | $90-130/hr | 55-65% |
Source: Industry analysis of Australian MSP billing rates vs salary costs. Worker rates inclusive of super and overheads.
The margins are enormous — and they rely on not paying you for all the hours you actually work.
If your MSP genuinely paid award rates for actual hours worked — including overtime, on-call, travel, and off-the-clock work — their margins would roughly halve.
How to Calculate If You're Being Underpaid
Step 1: Determine Your Classification
Use our Professional Employees Award Guide to identify your correct classification level.
Step 2: Track Actual Hours for 4 Weeks
Record: - Start and end time each day - Lunch breaks (actual, not scheduled) - After-hours calls and emails - Weekend work - On-call time - Travel time between sites - Any work-related communication outside hours
Step 3: Calculate Award Entitlements
For each week: - Ordinary hours (38) × award rate - Overtime hours × 1.5 or 2.0 award rate - On-call allowance (if applicable) - Travel time (if not counted in hours) - Weekend penalties - Shift loadings
Step 4: Compare to Your Actual Pay
Divide your weekly salary by actual hours worked to get your effective hourly rate. Compare this to the award rate for your classification.
Step 5: Calculate the Gap
Multiply the shortfall by the weeks you've worked. If this has been going on for years, the amount can be substantial.
Case Study: "Dave the L2 Engineer"
Dave works at a mid-sized MSP in Sydney. He earns $85,000 as an annual salary.
His actual week: - Mon-Fri: 8 AM - 5:30 PM (47.5 hrs, 9.5 hrs unpaid overtime) - 1 night/week on call (7 PM - 7 AM, Thursday) - Weekend rotation: 1 in 4 (2 hours actual work each weekend, plus availability) - Travel to client sites: 3 hours/week - After-hours emails/Teams: 30 mins/day average
His actual hours: ~55 hours/week average
Award entitlement for Level 3 (correct classification): ~$108,000
His salary: $85,000
Annual underpayment: ~$23,000 plus ~$2,600 super
Over 3 years: ~$77,000 plus interest.
This is not hypothetical. This is the standard MSP experience.
The Wage Theft Timeline: What's Happening Now
| Year | Development |
|---|---|
| 2020 | Wage theft criminalised in Victoria (largest state by IT employment) |
| 2021 | Fair Work Amendment (Wage Theft) Act passed — civil penalties increased |
| 2023 | FWO recovered $532M in unpaid wages nationally across all industries |
| 2024 | Right to disconnect law begins (non-small business) |
| 2025 | Right to disconnect extends to small business |
| 2026 | ATO/FWO joint sham contracting blitz targets IT industry |
| Now | MSP industry is increasingly in regulators' sights |
The trajectory is clear. The regulations are tightening, enforcement is increasing, and the MSP industry's labour practices are coming under scrutiny.
What to Do Next
If You Think You're Underpaid
- Track your hours — 2-4 weeks of solid data is powerful evidence
- Read your contract — does it reference an award? Does it have an annual salary arrangement clause?
- Calculate the gap — use the award rates for your classification
- Speak to an employment lawyer — many offer free initial consultations
- Contact Fair Work Ombudsman — 13 13 94 or fairwork.gov.au
- You can claim back-pay for up to 6 years
If You're an MSP Owner Reading This
The liability you're carrying by underpaying staff is enormous. Back-pay claims for 5-10 employees going back 6 years can easily exceed $500,000 — plus legal costs, penalties, and reputational damage.
A wage audit now is cheaper than a Fair Court claim later.
This article provides general information only. For specific circumstances, consult an employment lawyer or the Fair Work Ombudsman.
Related: Professional Employees Award Guide | Sham Contracting in IT | Right to Disconnect | MSP Salary Calculator | Fair Work and MSPs
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