The Australian Red Cross Society has entered into enforceable undertakings with the Fair Work Ombudsman (FWO) that will back-pay employees more than an estimated $25 million.
The enforceable undertakings have been entered into with the society’s humanitarian services and ‘Lifeblood’ divisions, which coordinate Australia’s blood donations and services.
The Humanitarian Services Division self-reported in 2018 that it had underpaid employees across Australia after identifying the underpayments during an internal review.
The underpayments occurred mostly due to the Red Cross applying the incorrect award or enterprise agreement to employees and incorrectly classifying them as award-free, resulting in underpaying a wide range of minimum rates and entitlements.
The Humanitarian Services Division underpayments affected more than 10,000 employees, and it is estimated that they might have been underpaid by more than $22 million between 2012 and 2021.
The investigation by the FWO following the initial self-report led to the discovery of underpayments in the ‘Lifeblood’ division, which occurred as a result of the Red Cross incorrectly believing that some employees were outside the coverage of relevant enterprise agreements.
As a result, up to 1160 Lifeblood employees were underpaid various leave entitlements, shift-work and public holiday loadings, overtime, redundancy entitlements, superannuation and minimum rates of pay between 2010 and 2021, totalling more than $3.5 million.
In total, it is estimated that the Red Cross has underpaid more than 11,000 current and former employees more than $25 million. Individual underpayments range from less than $100 to more than $20,000.
‘Under the two enforceable undertakings, the Red Cross has committed to stringent measures to comply with the law and protect its workforce,’ Fair Work Ombudsman Sandra Parker said.
‘This includes engaging at its own cost an expert auditing firm to check its workplace law compliance for the next two to three years'.
‘This matter serves as a warning to all employers, particularly those in the not-for-profit sector, that if you don’t prioritise the lawful payment of your staff, you risk underpaying them on a large scale and face significant additional costs of auditing and addressing the non-compliance. Any employers who need help meeting their workplace obligations should contact [the FWO] for free advice. Workers should also contact us with any concerns.’
Under the EUs, the Red Cross is also required to fund an independent company to operate a hotline for employees and commission workplace-relations training for staff.