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Even well-staffed corporates can make huge payroll mistakes

When a large aged care employer realised it had accidentally underpaid staff for at least six years, it came clean to the Fair Work Commission.
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Even well-staffed corporates can make huge payroll mistakes

Even well-staffed corporates can make huge payroll mistakes

4 July 2016


When a large aged care employer realised it had accidentally underpaid staff for at least six years, it came clean to the Fair Work Commission and avoided hefty fines and court appearances – but not the $4.8 million backpay!




 

The problem 

Aged Care Services Australia Group Pty Ltd (ACSAG) uncovered its grave payroll error – which left thousands of Australian aged care nurses, allied health workers and support staff out of pocket – in late 2014, with mistakes dating back to 2008. To its credit, ACSAG fronted up to the Fair Work Commission shortly after to face the music.

What went wrong

 It was all because the employer failed to keep up with overtime pay rates. And this from a large company, presumably with a dedicated HR and payroll department. This situation illustrates the importance of making sure you pay staff correctly down to the last cent. Employers are responsible for knowing what the correct rates of pay are and implementing systems to keep up with these.
In this case, the Fair Work Ombudsman agreed the breaches were an accident and commended the employer for absorbing the cost of the backpay and co-operating with Fair Work. Not that they got off scot-free, though...

Wearing the consequences

Because ACSAG voluntarily came forward, it got off relatively lightly – but it still cost much more than simply paying the correct rates in the first place would have. Not only were staff owed less than $5000 backpaid up front in full, staff owed more than $10,000 were offered $500 towards financial advice on how best to receive the payment.
ACSAG struck a deal known as an ‘Enforceable Undertaking’ with the Fair Work Ombudsman, which meant it had to:
  1. Engage independent auditors to check their calculations and rectify any additional underpayments which may be identified
  2. Randomly check the pay packets of five per cent of its workforce each year for the next three years
  3. Set up a special telephone hotline and email address for employees with inquiries about their circumstances
  4. Design and implement a training program for managers and contractors
  5. Donate $20,000 to Alzheimer’s Australia Dementia Research Foundation for the purposes of medical research, and
  6. Place a public notice in The Australian newspaper detailing its contraventions, the terms of the EU and apologising for the behaviour.

Lessons for other healthcare and social services employers

Staying abreast of pay rates and awards in this sector is crucial as staff do a lot of overtime and the amounts are subject to periodic review. The golden rule? If in doubt, always double-check.

Struggling to keep on top of your payroll obligations? Workplace Assured is the complete workplace relations solution that offers unlimited advice, an assessment of your current compliance, legal advice and representation in the event of a Fair Work claim and much more. Call us on 1300 575 394.

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