The Smith Family signs EU for underpayments totalling nearly $6m

The charity has signed an enforceable undertaking with the ombudsman for underpayments totalling $5.9 million, with the FWO confirming its commitments moving forward and that it has rectified all identified underpayments.

The Smith Family has signed an enforceable undertaking (EU) with the Fair Work Ombudsman (FWO), which has seen it back pay 784 workers a total of $5.91 million in underpayments made between 2016 and 2024, including interest and superannuation, committing to increased compliance measures and reporting its improvements to the ombudsman biannually.

The roles impacted included education program staff, managers, engagement advisers, and professionals such as marketing, accounting, and HR staff, the ombudsman said in a statement.

Following an investigation, the ombudsman found that The Smith Family “failed to have adequate systems in place to ensure it understands which industrial instruments, such as award or agreement, applied to its employees”, which led to the charity failing to provide many employees with the minimum rates and entitlements under their awards.

These entitlements included overtime, allowances, leave entitlements, and public holiday pay. It also breached workplace laws by failing to keep proper employment records for workers.

While the ombudsman found that the charity identified the correct award or agreement for employees, it paid employees “unlawfully low rates” as a result of classifying them at a lower level than their experience, qualifications, or duties permitted, on other occasions. “A failure to conduct regular reviews resulted in the underpayments persisting for several years,” the FWO said.

In a statement provided to HR Leader, the charity’s chief executive, Doug Taylor (pictured, left), said: “We are deeply disappointed that this occurred and sincerely apologise to our impacted team members … We have since completed a full remediation program to ensure all affected employees have received their correct entitlements.”

The ombudsman has confirmed the rectification of all identified underpayments made by the charity.

The charity identified its underpayments during an internal review and self-reported its non-compliance to the Fair Work Ombudsman in 2023. “Once we identified the issues, we undertook a comprehensive review of our systems and processes, and self-reported the matter to Fair Work,” Taylor said.

The back payments ranged from $1 to more than $121,000 for individual workers, including superannuation and interest, with an average back payment of $7,900.

Ombudsman Anna Booth (pictured, right) “welcomed” the enforceable undertaking, calling it appropriate as the charity cooperated with the FWO’s investigations, rectified its underpayments, and committed to improving compliance.

The charity has committed itself to ensuring future compliance, including commissioning an independent audit, and to establishing an internal forum to give an increased voice to employees on pay and conditions, and providing six-monthly reports to the FWO on “internal monitoring of workplace relations compliance by its internal committees”, and implementing an automated time-and-attendance system.

Booth noted that this case demonstrates the long-running problems that can arise if employers fail to establish adequate systems and checks and balances to ensure workers receive all lawful entitlements, which may lead to years of reviews and back payments, with interest.

“The national charity organisation, which helps young people and their families overcome poverty-based education inequality, has also committed to a range of measures to ensure compliance with workplace laws in future,” the FWO said.

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Carlos Tse

Carlos Tse is a graduate journalist writing for Accountants Daily, HR Leader, Lawyers Weekly.