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Award rates blunder leads to hefty employee backpay

Adrian Flores
Adrian Flores
31 July 2020 1 minute readShare
Award rates blunder leads to hefty employee backpay

A medical research institute has entered into an agreement with the Fair Work Ombudsman to back-pay employees more than $350,000 after it failed to correctly transition to modern awards.

The Walter and Eliza Hall Institute of Medical Research entered into an enforceable undertaking with the FWO after self-reporting last year that it had underpaid current and former employees.

In total, the organisation underpaid 423 current and former employees a total of $350,322 between January 2014 and October 2019, of which individual underpayments ranged from $3 to $ 21,267.

Under the enforceable undertaking, the institute must operate a hotline for the next six months that employees can use to make enquiries in relation to their entitlements, underpayments or related employment concerns.

The organisation is also required to display public, workplace and online notices detailing its workplace law breaches.

For any affected employees who cannot be located, the organisation will pay outstanding amounts to the Fair Work Ombudsman to be held in trust until the employees can be found.

The FWO said the underpayments are the result of the organisation failing to correctly transition to modern awards. 

The institute continued to pay the affected employees according to pre-modern awards which it believed applied, when it should have been paying them according to modern awards, which contained more generous provisions for a number of pay rates and entitlements.

This resulted in underpayments of employees’ minimum shift engagements, meal allowances, first-aid allowance, and penalty rates for overtime, weekend and public holiday work.

Affected employees included research and animal assistants and technicians, facilities/maintenance employees and students undertaking casual research, data entry, events and office work.

The FWO said the Walter and Eliza Hall Institute of Medical Research has located and back-paid the majority of employees, and has also paid superannuation and interest on backpayment amounts.

As a result of the Walter and Eliza Hall Institute of Medical Research’s co-operation with the investigation and the significant impact of COVID-19 pandemic on its revenue, the FWO decided the institute would not be required to make a contrition payment.

Fair Work Ombudsman Sandra Parker said that an enforceable undertaking was appropriate as the organisation demonstrated a strong commitment to rectifying all underpayments promptly.

“The enforceable undertaking commits the organisation to stringent measures to improve workplace compliance, including funding external audits over the next two years,” Ms Parker said.

“This matter should serve as a warning to all organisations that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale and face not only a massive administrative and logistical exercise, but [also] the cost of a significant backpayment bill.”

Award rates blunder leads to hefty employee backpay
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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