More than $2.1m backpay for aged care staff after payroll error

The current and former staff of aged care services provider Calvary Administration have been backpaid more than $2.1 million, including interest and superannuation. The company has also signed an enforceable undertaking (EU) with the Fair Work Ombudsman.

In 2021, Japara Healthcare’s (listed on the ASX at the time) subsidiary Japara Administration was acquired by a not-for-profit Catholic healthcare organisation and renamed Calvary Administration.

Japara Administration had self-reported underpayments to the regulator in July 2020. The underpaid employees were engaged at the time by Japara Administration in either full-time, part-time or casual capacity in aged care facilities in regional and metropolitan Victoria, New South Wales (NSW), South Australia (SA) and Tasmania (Tas).

Penalty rates and payroll

The underpayments — caused by a payroll error — saw Japara Administration underpay 2800 current and former employees $1,831,131, excluding superannuation and interest, between January 2017 and June 2020.

Due to the error, a Sunday penalty rate that should have been applied under a new agreement was not applied to any relevant worker between April 2018 and May 2020.

A review also found underpayments of annual leave loading under the Victorian enterprise agreement, and of lump sum parental leave entitlements under five agreements.

While the large majority of underpayments were in Victoria, including all the Sunday penalty rate and annual leave loading underpayments, 17 underpaid workers were in NSW, SA and Tas.

The company has backpaid all underpayments to all employees, with $2,103,617, including interest and superannuation, paid. Backpayments ranged from $1 to $3613. The average backpayment was $751.

Fair Work Ombudsman Anna Booth said an EU was appropriate as the company had cooperated with the FWO’s investigation and demonstrated a strong commitment to rectifying underpayments.

Improving compliance, a priority

“Under the enforceable undertaking, Calvary Administration has committed to implementing stringent measures to ensure its workers are paid correctly. These measures include commissioning, at its own cost, independent audits to check its compliance with workplace laws over the next two years,” Booth said.

“This matter shows how important it is for employers to place a high priority on their obligations, to ensure that their systems provide for full compliance with all entitlements. Shortcomings in the company’s payroll system and broader compliance led to breaches of their own enterprise agreements that left hard-working employees short-changed,” Booth said.

“Improving compliance in the care sector is a priority for the Fair Work Ombudsman in 2023–24. In this and other sectors we expect employers to invest the time and resources to regularly review if they are meeting all lawful entitlements and to remedy any issues.”

Under the EU, Calvary Administration must make a $120,000 contrition payment to the Commonwealth’s Consolidated Revenue Fund. The EU also requires Calvary Administration to ensure relevant staff undertake workplace relations training. It must also publish notices about its contraventions on its website and run a service desk for a year so employees can raise queries about their pay or entitlements.

The majority of underpaid employees were part-time aged care workers engaged as personal care workers, leisure and lifestyle assistants, coordinators and diversional therapists, cleaners, laundry and kitchen workers, cooks and maintenance workers.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance.

Image credit: iStockphoto.com/marrio31