When was the last time you checked the award rate for your employees?  For one employer, a review of its pay practices revealed it owed almost $4.8 million to employees for underpaid overtime rates. 

Overtime Oversight

In November 2014, Aged Care Services Australia Group Pty Ltd (ACSAG) undertook a self-initiated review that revealed 4,850 former and current staff had been underpaid $4.782 million for overtime worked between 2008 and 2014.  ACSAG’s parent company, Japara Healthcare Ltd (Japara), voluntarily reported the underpayments to the Fair Work Ombudsman (the Ombudsman) in December and cooperated with the subsequent Fair Work investigation.

Honesty and Action

To rectify its breach of 24 separate industrial instruments, ACSAG agreed to implement new governance procedures by July 2015 and have a new electronic time and attendance system in place by the end of the year.  ACSAG and Japara have also entered into an Enforceable Undertaking with the Ombudsman requiring them to:

• Engage independent auditors to check their calculations and rectify any additional underpayments identified;
• Perform random checks of the pay of 5% of their workforce annually, for the next three years;
• Establish a telephone hotline and email address for affected employees;
• Develop and implement a training program for managers and contractors;
• Donate $20,000 to Alzheimer’s Australia Dementia Research Foundation for the purpose of medical research; and
• Publish a public apology detailing its contraventions and the terms of the Undertaking in The Australian.

ACSAG apologised to affected employees and will offer $500 towards financial advice for those employees owed more than $10,000.  Over 2,100 staff owed less than $5,000 have already been reimbursed $1.4 million.

Note for Employers

This is yet another reminder that employers must be across all laws applicable to their employees and workplace.  Regular reviews of pay practices allow you to identify issues early and implement a management plan to avoid costly lump sum repayments.  The Ombudsman offers a number of tools to assist employers in calculating employee entitlements on their website at www.fairwork.gov.au. 

Contact Peter McNamara for more information of employee entitlements and pay practice reviews.

For more information on this case or to read the Enforceable Undertaking go to http://www.fairwork.gov.au/about-us/news-and-media-releases/2015-media-releases/may-2015/20150508-japara-eu-presser.