Southern Cross Care signs undertaking for $11m in underpayments to 5.5k staff

The aged-care service provider was ordered to sign an enforceable undertaking by the Fair Work Ombudsman after KPMG identified compliance and time and attendance system issues.

After underpaying thousands of its employees a total of $11,771,825, including interest and superannuation, NSW and ACT-based aged-care services provider Southern Cross Care will sign an enforceable undertaking (EU) with the Fair Work Ombudsman.

Southern Cross Care is a not-for-profit that provides services across 27 retirement communities and 27 residential care homes in NSW (Sydney, the Central Coast, Far North Coast, Riverina, and South West Slopes) and the ACT.

These underpayments were self-reported by the company to the Fair Work Ombudsman on 24 November 2023.

After an employee asked about overtime payments in 2023, Southern Cross Care commissioned KPMG to undertake an investigative audit.

The audit and subsequent reviews identified non-compliance with the enterprise agreement and found issues with its time and attendance system and a manual payroll process, which were inconsistent with enterprise agreement requirements and led to overtime, allowance, and shift penalty underpayments.

These errors impacted the payment of 5,500 of its casual, full-time and part-time workers between July 2017 and October 2024, including home-care employees, assistants in nursing, registered and enrolled nurses, facility managers, diversional therapists, cooks, and handypersons.

The $11,771,825 in underpayments constitutes back payments to employees, ranging from less than a dollar to $44,593, including superannuation and interest at an average of $1,716 per worker.

Under the EU, the Fair Work Ombudsman ordered Southern Cross Care to notify former and current employees about the underpayments and inform the ombudsman when it has implemented its new time and attendance system.

In addition, it will have to provide training for all its employees on the use of the new system and regularly report to its board about compliance.

Finally, the undertaking commits Southern Cross Care to establish feedback channels for employees, including surveys, an anonymous feedback form, monthly team meetings and an external hotline for whistleblower complaints.

The aged-care service provider has since back paid 3,603 employees $10,135,122, including interest and superannuation.

Fair Work Ombudsman Anna Booth (pictured) said this case highlights the significant long-running problems that result from an employer failing to have appropriate checks and balances to ensure workplace compliance.

“We expect employers to meet their legal obligations under their own enterprise agreements. Worker entitlements such as overtime and weekend penalties are important and can soon create a large underpayment bill if they’re not correctly paid when they should be,” Booth said.

“We welcome Southern Cross Care’s acknowledgement of its breaches and the underlying issues, and the measures taken to rectify them and ensure future compliance for their workers.”

This news follows an enforceable undertaking being signed with the Fair Work Ombudsman by Uniting Communities in March, the University of Tasmania in December, Monash University in the same month, Queensland University of Technology in November, and Westpac in the same month.