University of Melbourne to pay $72m in staff compensation after enforceable undertaking

The University of Melbourne will complete a total of $72 million in payments to more than 25,000 underpaid staff as part of entering an enforceable undertaking with the Fair Work Ombudsman (FWO).

A “systemic issue” was how Fair Work Ombudsman Anna Booth described the underpayments that continued at the University of Melbourne for many years. According to the FWO, academics at the university were often paid according to “benchmarks”, such as words-per-hour or time-per-student, rather than the actual hours they had worked.

“The University of Melbourne now accepts that it was unlawful that for many years, its casual academics adhered to ‘benchmarks’ which were inadequate and resulted in some employees not being paid for all hours worked,” said Booth.

“The University of Melbourne deserves credit for acknowledging its governance failures and non-compliance issues and for committing significant time and resources to put in place corrective measures to ensure both full remediation of its staff and a transformation for the future.

“This enforceable undertaking is the most comprehensive entered into by any university, and provides an example for the sector (and large employers generally) on what it means to turn practices around with a long-term commitment to embedding a worker voice mechanism to respond to feedback and to meeting all workers’ legal entitlements.

“In this particular instance, it is also appropriate that the university has agreed to make a contrition payment.”

Along with the repayments, the university has agreed to also make a $600,000 contrition payment to the Commonwealth Consolidated Revenue Fund.

The FWO – which previously commenced legal action against the university in 2023 for alleged contraventions – has discontinued its legal action, citing the wide-ranging outcome achieved by the enforceable undertaking (EU) as the better pathway. Booth said the execution of the EU shows that the Fair Work Ombudsman’s preference is to work with universities to address systemic non-compliance issues.

“We’ve been very clear for several years that addressing the systemic issues in the university sector is one of our top priorities, and we look forward to working with the leadership teams at universities nationally to assist them to do the sustained, smart work required to ensure full compliance with workplace laws,” said Booth.

“The commitments made in this EU to effective corporate governance of workplace relations compliance and inclusion of strong worker voice and consultation mechanisms are also key features that we expect to see in compliant businesses.”

“This EU continues to lift the bar for sustainable compliance, and large employers should be prepared to address these areas when working with us to resolve issues.”

The FWO stated that individual underpayments range from less than $1 to $150,881, with six total employees being underpaid more than $100,000, with most underpaid less than $5,000. The university has already back paid a large majority of those entitlements, including interest and super.

Due to the systemic failures in compliance, oversight and governance processes being the key causes of the underpayments, the university has agreed to measures that will address and fix these issues, thus avoiding failing future compliance:

• Rectifying outstanding underpayments identified under its remediation program with the FWO’s continued oversight (about $3.6 million, including super and interest, remains to be paid).

• Committing to design, develop and implement (by August 2025) a comprehensive enterprise resource planning system that will include a human resources and finance system, payroll system, and rostering and time-and-attendance system, and undertaking an audit of the new system following its implementation.

• Taking a leading role in helping drive sector-wide changes by sharing learnings and seeking to discuss compliance issues in the Group of Eight universities forum.

• Embedding a worker voice mechanism and a focus on corporate governance by ensuring there is centralised oversight of and accountability for wage compliance and an effective flow of information in respect of wage compliance issues from employees to executive level and vice versa.

• Establishing subcommittees of the university council and the university executive, with an explicit focus on workplace relations compliance, as well as a new centralised Employment Compliance Directorate committed to supporting a culture of compliance and continuous improvement at the University of Melbourne.

• Commissioning training and education for relevant staff and providing clear internal pathways for employees to raise queries relating to their wages and entitlements.