HR mistake costs business $54k

A six-year oversight by a firm’s HR team has led to a Fair Work investigation and a hefty back payment to staff

The Fair Work Ombudsman has found a Coffs Harbour business has underpaid its staff after a critical HR error.
Over a six year period, the firm failed to pay correct annual leave entitlements and calculated inaccurate leave balances for its shift workers.
This meant 75 workers received incorrect leave balances and 61 workers were underpaid a total of $54,700 in annual leave entitlements. Some employees were affected by both errors.
The highest underpayment to a single worker was $4,330 and the largest correction to annual leave was 70.59 hours.
A series of successive workplace agreements gave the workers an extra week of annual leave as well as annual leave loading that included shift penalties. The investigation was sparked after a complaint from an employee who suspected that the agreement was not being applied correctly.
The business immediately back-paid all outstanding leave entitlements and adjusted all leave balances of current and former employees, Fair Work Ombudsman Natalie James said.
“This is an example of an employer who, when approached by the Fair Work Ombudsman, recognised that its management practices led to significant employee underpayments and worked with the Agency to rectify the problem," she said.
To prevent this situation, the firm should have had the proper systems in place to monitor and calculate correct leave entitlements for workers, she added.
Most underpayments such as this were accidental, resulting from firms failing to check their workplace law obligations, James said in a statement.
“When we find errors, our preference is to educate employers about their obligations and assist them to put processes in place to ensure the mistakes are not repeated,” she said.
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