9 December 2024

The University of Melbourne will complete $72 million in payments, including superannuation and interest, to more than 25,000 underpaid staff as part of entering into an Enforceable Undertaking (EU) with the Fair Work Ombudsman.

Under the EU, the University of Melbourne will also make a $600,000 contrition payment to the Commonwealth Consolidated Revenue Fund and implement a broad range of measures to prevent future non-compliance with workplace laws.

Fair Work Ombudsman Anna Booth said the commitments secured under the Enforceable Undertaking would help to drive cultural change across the University of Melbourne and the wider university sector.

Academics were often paid according to ‘benchmarks’, such as words-per-hour or time-per-student, rather than the actual hours they had worked.

“The University of Melbourne now accepts that it was unlawful that for many years, its casual academics adhered to ‘benchmarks’ which were inadequate and resulted in some employees not being paid for all hours worked,” Ms Booth said.

“The University of Melbourne deserves credit for acknowledging its governance failures and non-compliance issues, and for committing significant time and resources to put in place corrective measures to ensure both full remediation of its staff and a transformation for the future.

“This Enforceable Undertaking is the most comprehensive entered into by any university, and provides an example for the sector (and large employers generally) on what it means to turn practices around with a long-term commitment to embedding a worker voice mechanism to respond to feedback and to meeting all workers’ legal entitlements.

“In this particular instance, it is also appropriate that the University has agreed to make a contrition payment.”

In light of the wide-ranging outcomes achieved under the EU, the Fair Work Ombudsman has discontinued the legal action it commenced against the University of Melbourne in 2023 for alleged contraventions in respect of 14 casual academics in its Faculty of Arts between 2017 and 2020. As part of the EU, the University of Melbourne has also admitted to underpaying and failing to make and keep records for those 14 casual academics.

The penalty the Fair Work Ombudsman secured against the University of Melbourne in April 2024 for taking adverse action against two other casual academics is unaffected by the EU.

Ms Booth said the execution of the EU shows that the Fair Work Ombudsman’s preference is to work with universities to address the systemic non-compliance issues in the sector.

“We’ve been very clear for several years that addressing the systemic issues in the university sector is one of our top priorities, and we look forward to working with the leadership teams at universities nationally to assist them to do the sustained, smart work required to ensure full compliance with workplace laws,” Ms Booth said.

“The commitments made in this EU to effective corporate governance of workplace relations compliance and inclusion of strong worker voice and consultation mechanisms are also key features that we expect to see in compliant businesses. This EU continues to lift the bar for sustainable compliance, and large employers should be prepared to address these areas when working with us to resolve issues,” Ms Booth said.

Ms Booth said the University of Melbourne’s remediation program, which commenced in 2020, had identified $54.05 million in underpayments of 25,576 current and former employees between 2014 and 2024.

Individual underpayments range from less than $1 to $150,881. Six employees were underpaid more than $100,000, with most underpaid less than $5,000.

The University has already back-paid the large majority of those entitlements, plus interest, superannuation and interest on superannuation. The University is paying impacted staff $12.32 million in interest, $4.62 million in superannuation and $1.09 million in interest on superannuation, which will take total payments to more than $72 million.

The 14 academics that were the subject of the Fair Work Ombudsman’s 2023 legal action are among the workers who have been back-paid in full.

Under the terms of the EU, the University of Melbourne has acknowledged it has underpaid a range of entitlements owed under its Enterprise Agreements, including minimum wages, minimum engagement entitlements, casual sessional teaching and casual non-sessional activities rates, shift loadings and overtime entitlements.

Most of the underpayments relate to casual academic and professional staff across all faculties and campuses at the University, including issues in relation to the University’s routine failure to pay staff for many hours of marking, teaching and other associated academic work.

The University also underpaid some fixed-term and continuing academic and professional staff, and some trades and services employees.

Systemic failures in compliance, oversight and governance processes were key causes of the underpayments, and under the terms of the EU the University has agreed to a range of measures to address these issues and ensure future compliance, including:

• Rectifying outstanding underpayments identified under its remediation program with the FWO’s continued oversight (about $3.6 million, including super and interest, remains to be paid);
• Committing to design, develop and implement (by August 2025) a comprehensive enterprise resource planning system that will include a human resources and finance system, payroll system, and rostering and time-and-attendance system, and undertaking an audit of the new system following its implementation;
• Taking a leading role in helping drive sector wide changes by sharing learnings and seeking to discuss compliance issues in the Group of Eight universities forum;
• Embedding a worker voice mechanism and a focus on corporate governance by ensuring there is centralised oversight of and accountability for wage compliance and an effective flow of information in respect of wage compliance issues from employees to executive level, and vice versa;
• Establishing subcommittees of the University Council and the University Executive with an explicit focus on workplace relations compliance as well as a new centralised Employment Compliance Directorate committed to supporting a culture of compliance and continuous improvement at the University of Melbourne; and
• Commissioning training and education for relevant staff and providing clear internal pathways for employees to raise queries relating to their wages and entitlements.

These measures build on significant compliance reforms by the University of Melbourne in recent years since the FWO’s investigation began. This includes the University last year investing in 13 new roles called casual workforce compliance managers, who strengthen governance and compliance with the Enterprise Agreement, providing centralised oversight and support for each faculty.

Since announcing in 2022 that addressing systemic non-compliance in the universities sector was a top priority, the Fair Work Ombudsman has also entered into Enforceable Undertakings with the University of Technology Sydney, the University of Newcastle and Charles Sturt University, and commenced ongoing legal action against the University of NSW.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance. An interpreter service is available on 13 14 50.