National charity pays back over $5.9 million in lost wages

A prominent national charity has completed paying back more than $5.9 million to hundreds of workers who were underpaid around the country for years.

The Smith Family, which works to overcome poverty-driven education inequality, underpaid 784 workers at its head office in Sydney and across all states and territories for eight years, the Fair Work Ombudsman said.

The repayments were part of an enforceable undertaking The Smith Family has entered into with the FWO, which also includes a range of measures to ensure workplace law compliance in the future.

A broad range of workers were underpaid, including education program staff, managers, engagement advisors, and professionals such as marketing, accounting, and HR staff.

In its investigation, the FWO found The Smith Family failed to have adequate systems in place to ensure it understood which industrial instruments, such as Award or Agreement, applied to its employees.

This led to the charity failing to pay many employees the minimum rates and entitlements owing to them.

On other occasions, the FWO said, The Smith Family identified the correct Award or Agreement but paid employees unlawfully low rates as a result of classifying them at a lower level than was appropriate given the employee’s experience, qualifications or duties being performed.

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A failure to conduct regular reviews resulted in the underpayments persisting for several years.

Overall, workers were underpaid minimum wages and a range of other entitlements, including overtime, allowances, leave entitlements and public holiday-related pay.

The charity also breached workplace laws by failing to keep proper employment records for workers.

It identified underpayments during an internal review and self-reported its non-compliance to the Fair Work Ombudsman in 2023.

The Smith Family has rectified all identified underpayments, paying $5.912 million for a total of 784 current and former employees it underpaid between 2016 and 2024.

This included underpaid wages and entitlements, interest and superannuation contributions.

Back-payments to impacted individual employees range from $1 to more than $121,000, including superannuation and interest, with an average back-payment of about $7900.

Fair Work Ombudsman Anna Booth said an enforceable undertaking was appropriate as The Smith Family had cooperated with the FWO’s investigation, rectified its underpayments and committed to improving its compliance.

“We welcome The Smith Family’s commitments to ensure future compliance, including to commission an independent audit, and to establish an internal forum that will increase employees’ voice on pay and conditions,” Booth said.

“This matter serves as a warning of the significant long-running problems that can result from an employer failing to have adequate systems and checks-and-balances in place to ensure workers are receiving all lawful entitlements. Years of reviews and back-payments, with interest, will follow.”

The Smith Family chief executive Doug Taylor said the organisation was “deeply disappointed” in what had occurred, and apologised to all affected team members.

 “Once we identified the issues, we undertook a comprehensive review of our systems and processes, and self-reported the matter to Fair Work,” he said.

 “We have since completed a full remediation program to ensure all affected employees have received their correct entitlements.”

Under the Enforceable Undertaking, The Smith Family has committed to a range of measures to ensure future compliance, including an independent audit, establishing an internal forum for consultation on pay and conditions, and providing six-monthly reports to the FWO.