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Disability NFP back pays staff $6.5m after ‘fundamental’ payroll error

Regulation

The FWO has secured its fifth enforceable undertaking in FY2023–24, and its third involving a not-for-profit care provider.

By Christine Chen 9 minute read

Disability support services provider Aruma has back paid staff more than $6.5 million and signed an enforceable undertaking with the FWO for breaching its enterprise agreement with over 1,000 employees.

The FWO said the Victorian not-for-profit self-reported its breaches in June 2021 after discovering them the year prior when it engaged KPMG to conduct a payroll review.

The review found Aruma misinterpreted its enterprise agreement and had “deficiencies” in its payroll system.

As a result, over 1,000 former and current employees between 2017 and 2021 had not been paid the right minimum rostered hours, and overtime rates were incorrectly applied, the FWO said.

In particular, Aruma did not pay employees who worked more than six consecutive shifts without 24-hour off-duty “treble time” rates.

The affected employees worked in regional and metropolitan Victoria and held care roles in residential accommodation and community-based services.

The FWO said Aruma’s underpayments ranged from $5 to more than $230,000, and the majority of back-payments were between $1,000 and $2,000.

Aruma has since made more than $6.5 million in back payments to the “large majority” of affected employees. The payments included $697,000 in superannuation and $488,000 in interest.

Deputy Fair Work ombudsman Mark Scully said an enforceable undertaking was an appropriate outcome because Aruma had self-reported to the watchdog.

Mr Scully said Aruma had also co-operated with the FWO’s investigation and demonstrated a “strong commitment” to rectifying its underpayments.

“Under the enforceable undertaking, Aruma has committed to implementing stringent measures to ensure all its workers are paid correctly. These measures include commissioning, at its own cost, an independent audit to check its ongoing compliance with workplace laws,” Mr Scully said.

“This matter demonstrates how important it is for employers to place a high priority on their workplace obligations. Fundamental errors were left unchecked by Aruma, which led to long-term breaches of its own enterprise agreement and a substantial back-payment bill.”

“We expect all employers to invest the time and resources to ensure they are meeting all their workers’ lawful entitlements.”

Under the enforceable undertaking, Aruma must make $585,000 in remaining back payments to 77 staff by January 2024.

It must also notify all affected employees of the enforceable undertaking and run an employee hotline for questions about employment issues.

It comes after Tasmania’s largest aged care operator Southern Cross Care signed an undertaking in September to back pay staff $6.9 million. In July, healthcare provider Apollo Health Limited also signed an undertaking and back paid staff more than $4.86 million.

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Christine Chen

Christine Chen

AUTHOR

Christine Chen is a graduate journalist at Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector.

Previously, Christine has written for City Hub, the South Sydney Herald and Honi Soit. She has also produced online content for LegalVision and completed internships at EY and Deloitte.

Christine has a commerce degree from the University of Western Australia and is studying a Juris Doctor degree at the University of Sydney. 

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