Fair Work Ombudsman Executive Director Mike Campbell said the reason for the underpayment was the law firm's lack of awareness of its obligation under workplace relations law.

"We've decided against prosecuting, because we're satisfied the underpayment was inadvertent and the firm has co-operated fully to rectify the matter," he said.

"But we really do expect employers to make a much better effort than this to ensure they pay all entitlements owing to any employees they lay off."

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Campbell said that tough economic conditions represent challenging times, but neither that nor ignorance of the law is an excuse for failing to pay full entitlements.

"Redundancy entitlements play a vital supporting role for people while they attempt to pick themselves up, find a new job and get back on their feet," he said.

Employers who fail to pay full entitlements to workers can face fines of up to $33,000 per breach of workplace law.