La Trobe University’s $9.3 Million Wage Underpayment: Important Lessons for Australian Employers

This case serves as an important reminder to employers about tracking underpayments to avoid financial and reputational costs.

A media release from the Fair Work Ombudsman (FWO) announced one of Australia’s largest academic wage theft cases involving La Trobe University. Through a Wage Remediation Project, La Trobe identified systemic underpayments affecting 6,774 employees over eight years (2015-2022).

Individual underpayments ranged from $2 to $91,837, with total underpayments exceeding $9.3 million. Thirty-five employees were underpaid more than $20,000 each, which excluded superannuation and interest.

To date, over $10.08 million has been reimbursed to affected employees.

Most organisations face significant challenges in maintaining payroll compliance. Even well-intentioned organisations find themselves overwhelmed due to its complexity. This case highlights the risks of such errors and the need for proactive measures to prevent costly mistakes.

Let us examine the key findings of this case, next steps involved, and ways to protect your business.

Root causes: What led to the underpayments?

In the current Australian legislation, intentional underpayment of wages is a criminal offence. An employer may be liable if they knowingly fail to pay employees their entitled wages as required by the Fair Work Act 2009 (Cth).

In this case, FWO acknowledged La Trobe’s cooperation and remediation efforts, resulting in an Enforceable Undertaking instead.

Before examining the terms of the agreement, it is important to note that the investigation into La Trobe’s payroll practices revealed a systemic issue across its 10 schools. These issues affected employees across Victorian campuses and in Sydney, highlighting the risks of inadequate payroll oversight.

Four critical compliance issues were identified:

1. Differing payroll practices causing system failures, compliance blind spots, and poor governance over processes
2. Incorrectly applied Enterprise Agreements meant employees were not properly compensated for their actual hours worked
3. Inaccuracy in record-keeping led to fundamental gaps in tracking both hours worked and correct pay rates
4. Payments made on predetermined ‘benchmarks’ meant employees were compensated for marking work based on metrics such as words-per-hour, words-per-student, or assessments-per-term rather than actual time worked. This calculation approach was responsible for most underpayments at La Trobe.

Enforceable Undertaking: Compliance Commitment

La Trobe has entered a legally binding Enforceable Undertaking that mandates:

• Independent audits to rectify non-compliance and payroll discrepancies
• Centralised oversight mechanisms to prevent future payroll issues
• Upgraded payroll systems and record-keeping infrastructure for improved accuracy and compliance
• Develop a consultative body comprising university management, employees, and union representatives
• Workplace relations training for key management employees
• Dedicated mechanism for employee payment complaints and review processes
• Regular updates to FWO on review progress, employee complaints, and any non-compliance issues identified
• Written guidelines on casual entitlements under the 2023 Enterprise Agreement, along with ongoing compliance monitoring
• Implementation of detailed staff communication about the undertaking

These requirements offer valuable insights into what regulators consider essential for proper payroll governance.

What are the key takeaways for employers?

This case serves as an important reminder to all employers about the importance of consistency in payroll practices and the significant financial and reputational costs of non-compliance.

Immediate next steps for employers

Employers should take proactive measures to avoid similar compliance issues in their business. Critical measures to implement include:

1. Ensure regular payroll audits are conducted

• Review all employment agreements, awards, and enterprise agreements currently in effect
• Compare actual payments against entitlements required by relevant agreements
• Examine time recording systems and processes for accuracy
• Engage independent auditors for objective assessment if needed

2. Centralise and standardise payroll processes

• Eliminate fragmented payroll practices across departments
• Implement consistent payroll procedures organisation-wide
• Ensure all payroll staff operate within the same regulated framework
• Create a single source of truth for employment conditions and entitlements

3. Improve record-keeping practices

• Implement systems that accurately track hours worked
• Maintain comprehensive records of all payment calculations
• Create audit trails for all payroll decisions and adjustments

Where to next?

To ensure your organisation is compliant in an ever-changing regulatory landscape, engage our workplace relations specialists for a comprehensive payroll compliance review before issues escalate into costly regulatory action.

We offer confidential assessments of your current systems, practical recommendations for improvement, and ongoing support.

Contact us today to discuss your payroll compliance needs.

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