By Bethany Silverman
It’s become increasingly common that businesses are self-identifying large underpayments. This often occurs after a business implements new payroll systems or other processes. Recently, a large childcare provider which operates 70 services across New South Wales, Victoria and Queensland, announced that it is now back paying employees over $1.5 million after it identified it had underpaid casual and part-time employees overtime payments under the Children’s Services Award 2010 and the Educational Services (Teachers) Award 2010.
When implementing a new payroll system, the company realised it has mistakenly calculated overtime on a weekly basis, rather than on a daily basis. As a result, it had not paid part-time and casual employees who worked more than eight hours on a single day overtime rates as prescribed in the Award.
In total, 2,144 employees, who were mostly early childhood educators, were underpaid between 2013 and 2019. As of 1 March 2021, 1,700 employees had been back paid, with only $82,000 left to pay to former employees which the company is attempting to locate.
After identifying the underpayment, the company notified the Fair Work Ombudsman (FWO), and entered an Enforceable Undertaking (EU), in which it has committed to implementing stringent measures to protect its workforce. This includes engaging an expert auditing firm to check its compliance with workplace laws for the next two years and providing evidence that it has developed systems and processes for ensuring compliance in future.
What is an enforceable undertaking?
An EU is a written agreement between the FWO and someone, usually an employer, who has not followed a workplace law. The purpose of an EU is to fix the breach and ensure it doesn’t happen again. An EU is used instead of the FWO commencing legal action against the employer in cases where:
- an investigation has shown that workplace laws have not been followed;
- the employer is prepared to voluntarily fix the issue; and
- the employer agrees to preventative actions for the future.
The FWO will prepare the draft terms, and the employer can then provide input and seek legal advice before signing the agreement. The EU will usually include details such as:
- an acknowledgement by the employer that the law has not been followed;
- an agreement by the employer to do certain actions to fix the breach (such as remedying an underpayment, apologising, printing a public notice); and
- a commitment by the employer to future compliance measures (such as regular internal audits, training for managers and staff, future reporting to the FWO).
Failure to comply with an EU is a serious matter and the FWO can commence court proceedings to have the terms enforced if an employer fails to comply.
If you’re an HR Assured client and you need workplace advice, contact our 24/7 Telephone Advisory Service.
Not an HR Assured client and have a query about an EU or a potential underpayment error? The team at HR Assured can support and advise your business on a range of workplace matters. Contact us today to arrange a confidential, no-obligation chat.
Bethany Silverman is a qualified Senior Workplace Relations Consultant at FCB Group and HR Assured. She regularly provides advice to a wide range of businesses in respect of compliance with workplace laws and managing complex matters including disciplinary and performance management processes and terminations.