Red Cross ordered to pay back $25M in underpaid wages

The Australian Red Cross Society is set to pay back $25m as recompense for over 10,000 underpaid workers across the country, the Fair Work Ombudsman has ruled.

The organisation first reported the discrepancy in 2018 after conducting an internal audit. The errors were purportedly the result of having applied the wrong award rate, worker classification, and other provisions in their enterprise agreements. In some cases, workers were assumed to be outside of certain awards coverage.

Underpaid staff were reportedly assigned to handle clerical, aged-care, disability support, disaster response and support, and social and community service work.

In the Humanitarian Services division, Red Cross owed more than $22m in back pay to more than 10,000 workers, from 2012 to present. Over in the Lifeblood division, the agency fell short of paying $3.5m to more than a thousand staff members, between 2010 and 2021.

Some unpaid wages cover leave entitlements, shift work, overtime work, public holidays, superannuation, minimum pay and redundancy entitlements. Individual payments range from less than $100 to more than $20,000.

Red Cross has repaid more than $10m since the issue came to light. As part of two enforceable undertakings with the FWO, Red Cross will have to pay workers in full (including interest and superannuation) by February 2022, as well as fund its own expert auditing firm to check its compliance with workplace regulations.

"I acknowledge this process has taken longer than hoped, but it has been important in order to resolve this properly and fully," said Kym Pfitzner, CEO of the Australian Red Cross.

The agency sent an email apologising to staff and explaining that the errors were unintentional.

Fair Work Ombudsman Sandra Parker recognised how Red Cross has committed to "stringent measures" to comply with the law and protect its workers.

"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," Parker said.