Employer under probe over $700k underpayment to its workers

Case highlights the importance of a regularly audited payroll to prevent errors

Employer under probe over $700k underpayment to its workers

An employer is under investigation by the Fair Work Ombudsman (FWO) as it underpaid its workers for years, ABC News reported.

According to the news outlet, the Tasmanian disability services provider “Li-Ve” discovered that they have been underpaying penalty rates, amounting to around $700,000, to employees working split shifts over 12 hours.

Underpaid workers

While the amount owed is still calculated, Li-Ve Tasmania chief executive Darren Mathewson said in a statement that hundreds of current and former staff members had been underpaid, and the provider immediately started auditing its payroll once it discovered the error.

“We were extremely concerned when we discovered this error and immediately began the work required to audit our payroll and pay all current and former employees their full entitlements as soon as we can,” the chief executive said.

“Our people are important to us; they are the lifeblood of what we do in providing support to Tasmanians living with disabilities and their families every day. Resolving this issue is our top priority,” Mathewson added.

In addition to repaying its staff members, Mathewson said that the NDIS-registered Tasmanian provider would also issue a formal apology to its staff.

“We have let our people down, but we are making sure we fix it,” Mathewson said. “Every dollar we owe will be paid.”

ABC News said that FWO did not comment on the issue as the matter is still ongoing.

Union says issue is very ‘alarming’

According to the news outlet, the Health and Community Services Union (HACSU) said the provider’s workforce was “an already low-paid sector.” Thus, staff members could be struck when their pay packets are lower than they should be.

“This is significant because these workers are paid just award wages, so when they are underpaid, it really does affect them and their day-to-day living,” HACSU assistant secretary Robbie Moore told The Guardian. “The fact they’ve been underpaid $700k is very alarming.’

Moreover, Moore expressed concern that underpayments will happen more frequently as independent contractors enter the industry. He added that any employer short-changing staff would be “vigorously pursued.”

“We need to ensure that underpayments to these staff that provide vital services to the community are being paid appropriately so they can earn the living they need, to provide for their family and pay all their bills and their mortgages,” Moore said.

Providers under pressure

Based on the same report, Li-Ve is not the first disability provider to underpay its workers because in 2020, the Disability Services Australia was forced to back pay over 800 employees with $1.6mil entitlements. In 2021, Wellways Australia committed to repaying $1.5mil to its staff members.

While there is no specific data on the incidence of underpayments in the disability services sector, Fiona Macdonald from the Australia Institute’s Centre for Future Work told The Guardian, “it was potentially widespread.”

“I did some research a couple of years ago where we had some workers keep time diaries, and we identified quite a lot of underpayment, it was only a small number of workers but all of them had been underpaid in one way or another,” Macdonald said.

Additionally, Macdonald emphasized that currently, providers are under pressure to minimize their costs and said competition in the disability services market was adding to the problems.

“Fundamentally a big part of the problem is the way in which the disability support system funds disability support, which is by the hour, and it’s at a low price, so there is an enormous pressure on providers to minimise costs,” Macdonald said.

ABC News reported that given the potential prevalence of underpayments, some amendments had been made, such as improving rules around broken shifts - the area Li-Ve’s underpayments stemmed from.

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