Disability Services Australia (DSA) has entered into an Enforceable Undertaking (EU) with the Fair Work Ombudsman and is back-paying employees more than $1.6 million.

The not-for-profit organisation, which provides services to disabled clients throughout NSW and operates a packaging factory at Mascot in Sydney, self-reported underpayments to the FWO in 2019.

Prompted by an employee query

After being prompted by an employee query, DSA became aware employees at the Mascot site were being provided with gift vouchers in lieu of overtime payments on Sundays, in contravention of workplace laws.

DSA subsequently commissioned an independent investigation of its compliance with workplace relations laws, which identified a range of non-compliance issues affecting supervisors and production staff at the Mascot site and workers in disability support and caring roles located at various locations throughout Sydney and in regional locations such as the Hunter and Southern Highlands regions.

Issues found by the independent investigator

Issues included incorrect use of time-off in lieu of overtime and penalty rates, underpayment of minimum wage rates, incorrect application of on-call and sleepover provisions, and underpayment of annual leave loading and allowances.

To date, the assessment has found that a total of more than 800 DSA employees were underpaid more than $1.6 million between 2013 and 2020. Individual underpayments range from $2 to over $100,000. The underpaid employees are not workers with disabilities.

Key factors causing the underpayments included inadequate governance and processes for ensuring compliance, annualised salaries being too low to meet all entitlements such as overtime and penalty rates, and some employees being incorrectly classified as being award free.

Further underpayments, expected to be significant in size, are yet to be quantified.

Other businesses caught in the net

In addition, underpayments totalling less than $50,000 have been identified at two other businesses operated by DSA – Macquarie Employment Training Services, a registered training organisation, and DSA Mentoring Services, which provides services to facilitate transition to the community for people with complex support needs. Both businesses are also covered by the EU.

The EU requires DSA, Macquarie Employment Training Services and DSA Mentoring Services to pay amounts owing to every affected employee, plus interest and superannuation, by March 2021.

Cooperation helps

Fair Work Ombudsman Sandra Parker said an EU was an appropriate outcome as DSA had cooperated with the regulator and demonstrated a strong commitment to rectifying underpayments.

“Under the Enforceable Undertaking, DSA has committed to stringent ongoing measures to ensure it complies with the law and protects its workforce. This includes engaging, at its own cost, an expert auditing firm to check its workplace compliance for the next two years, and report back to the FWO,” Ms Parker said.

“This matter serves as a warning to all public and private sector employers that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale. Any employers who need help meeting their lawful workplace obligations should contact us for free advice.”

Under the EU, DSA must also fund an independent organisation to operate a Hotline for employees to seek assistance on payroll or related queries; apologise to its employees; and display online, workplace and social media notices detailing its contraventions. Given the community services role of the not-for-profit organisation, the FWO did not consider a contrition payment to the Commonwealth was in the public interest.