Federal Court approves 30-proceeding settlement over alleged unpaid overtime for doctors
A $135 million settlement over unpaid overtime for junior doctors in Victorian hospitals has been approved, marking one of Australia's largest employment law resolutions.
The Federal Court gave final approval on October 31 to a settlement that will compensate thousands of junior doctors across Victoria who alleged they were systematically underpaid for overtime work. The resolution brings to a close 30 separate class actions against public health services, offering critical lessons for HR leaders navigating complex rostering and payment obligations.
At the heart of the dispute was a straightforward claim with far-reaching consequences: junior doctors said they worked un-rostered overtime that hospitals were required to pay but didn't. The Australian Salaried Medical Officers' Federation, along with individual doctors, argued that health services including Peninsula Health, Monash Health, and Western Health failed to compensate doctors for overtime they were authorised to perform, alleging contraventions of three industrial instruments and the Fair Work Act.
The litigation exposed thorny questions about how overtime obligations are interpreted and enforced. The court noted that hospitals raised various defenses, including disputes over the construction of overtime provisions, the effect of their overtime policies, and estoppel arguments. For employers, the case underscored the risks of relying on policies that may conflict with underlying industrial instruments.
After years of litigation, the parties reached agreement in February. Under the settlement, the State of Victoria will pay $135 million to eligible doctors, with additional amounts covering legal costs of just over $20.8 million and administration costs of $17.5 million. Any leftover funds return to the state. If the pool falls short, payments will be reduced proportionally.
The court found the settlement fair and reasonable given the complexity and risk involved in continuing the litigation. Justice Snaden noted that while one proceeding had seen a successful trial outcome for a lead applicant, extending those outcomes across 30 different health services and thousands of individual claims posed significant evidentiary challenges. Each doctor's claim would require individual assessment of hours worked, a potentially years-long process.
By September, more than 12,800 doctors had registered to participate in the settlement. Only three objected, and the court found none of those objections justified rejecting the deal. Lead applicants will receive reimbursement payments totaling $430,000 for their time and effort in pursuing the claims on behalf of the broader group, with ASMOF receiving $175,000.
For HR professionals, particularly those in healthcare, the settlement serves as a pointed reminder of the cost of getting pay wrong. The case demonstrates that alleged systemic underpayment, even when driven by workplace policies or practices that seem reasonable, can expose organisations to significant liability. It also highlights the importance of maintaining accurate records of all hours worked and ensuring internal policies align with award and agreement obligations.
Gordon Legal and Hayden Stephens & Associates will administer the distribution scheme, which includes provisions for late registrations in exceptional circumstances. The proceedings are set to be dismissed once the scheme is complete.
