The Australian Red Cross Society has entered into two Enforceable Undertakings (EUs) with the Fair Work Ombudsman and it is estimated the organisation will back-pay employees over $25 million.
The EUs have been entered into with the Red Cross’s Humanitarian Services Division and the organisation’s Lifeblood Division, which co-ordinates Australia’s blood donations and blood services.
The Humanitarian Services Division self-reported to the Fair Work Ombudsman in 2018 that it had underpaid employees across Australia after identifying underpayments during an internal review.
The underpayments largely occurred due to the Red Cross applying the incorrect award or enterprise agreement to employees and incorrectly classifying employees as award free, resulting in the underpayment of a wide range of minimum rates and entitlements.
The Humanitarian Services Division underpayments affected more than 10,000 employees, and it is estimated they may have been underpaid more than $22 million between 2012 and 2021.
Affected employees were located across all states and territories and were primarily engaged in clerical, aged care, disaster response and support, disability support, and social and community service work.
The investigation by FWO following the initial self-report led to the discovery of the underpayments in the ‘Lifeblood’ Division, which occurred as a result of the Red Cross incorrectly believing some employees were outside the coverage of the relevant Lifeblood enterprise agreements.
As a result, up to 1160 Lifeblood employees were underpaid various leave entitlements, shift work loadings, public holiday loadings, overtime, redundancy entitlements, superannuation and minimum rates of pay between 2010 and 2021, totalling over $3.5 million.
In total, it is estimated that 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.
Fair Work Ombudsman Sandra Parker said that EUs were an appropriate outcome as the not-for-profit organisation had cooperated and demonstrated a strong commitment to rectifying underpayments.
“Under the two Enforceable Undertakings, the Red Cross has committed to stringent measures to comply with the law and protect its workforce. This includes engaging, at its own cost, an expert auditing firm to check its workplace law compliance for the next two to three years,” Ms Parker said.
“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 us for free advice. Workers should also contact us with any concerns.”
The Red Cross has back-paid employees more than $10 million to date. The Humanitarian Services Division EU requires the organisation to pay the remaining amounts owing to every affected employee, plus interest and superannuation, by 21 February 2022.
Under the EUs, the Red Cross is also required to fund an independent company to operate a Hotline to assist its employees and commission workplace relations training for staff.
