Australian airline Qantas has admitted underpaying 638 employees by AUD$7 million (USD$4.4 million) over the last eight years. Qantas became aware of the problem in early 2019 and self-reported to the Australian government’s Fair Work Ombudsman.
A payroll bungle with winners and losers
It was a payroll bungle that had winners and losers. Hundreds of Qantas employees were overpaid to the tune of USD$13.5 million. Qantas won’t be moving to recover any of that money. In addition, Qantas will have to pay these workers another USD$5.5 million because it underpaid some entitlements.
Any employee who lost a monetary entitlement is also receiving an additional one-off cash payment of USD$610.
The core of the problem was a misclassification issue with the airline’s payroll. It impacted employees (primarily marketing and administrative staff) who should have been covered by the enterprise agreement that Qantas has with the Australian Services Union.
Instead, the airline paid them under individual contracts.
The result was that 65% of the employees missed out on a benefit to which they were entitled (such as rostered days off). But 83% of the employees were better off overall because they were paid higher base salaries and bonuses.
Qantas self-reports after it became aware of the issue
When Qantas became aware of the problem early last year, it self-reported to Australia’s Fair Work Ombudsman. The independent statutory agency/ombudsman helps oversee and regulate the Australian national workplace relations system. In a statement, Qantas Group Executive, Rob Marcolina said;
“We sincerely apologise to all our employees caught up in this misclassification issue, especially to those who were underpaid as a result. We take our obligations as an employer very seriously and have worked with the Australian Services Union and Fair Work Ombudsman to fix this.
“Since we first reported this issue in February last year, we’ve put a lot of resources into calculating the full impact, fixing it for those affected and putting systems in place to make sure it doesn’t happen again. We realise this type of conduct by companies doesn’t meet community expectations, and it doesn’t meet our own commitment to our people or compliance.”
Union lashes the airline
That the majority of impacted workers were better off overall made little difference to the Australian Services Union. The union accused the airline of wage theft. A union spokesperson, Linda White said;
“Qantas originally described this wage theft as an “embarrassing bungle” limited to just 55 underpaid workers who were ‘misclassified’ but we always knew that was not the case.
“This was not a misclassification or ‘bungle’ – it was a deliberate and systemic abuse of workers.
“Qantas deliberately put in place processes to avoid the enterprise bargaining agreement by abandoning the standard HR practice of having position descriptions attached to jobs, opening the door to underpayments.”
The Fair Work Ombudsman is more sanguine
Neither Qantas or Fair Work Ombudsman agree. Qantas apologized, made restitution and is not seeking to recover overpayments. The Ombudsman fined Qantas USD$240,000 (termed a ‘contribution payment’), required the airline to enter into an Enforceable Undertaking and undertake an external review.
This Enforceable Undertaking will require Qantas to investigate further to establish if they made any more underpayments. If further underpayments are found, there will be a higher ‘contribution payment’. The airline must also conduct audits over the next three years.
Qantas was smart to self-report. It saved the airline from the full wrath of the Ombudsman. The Ombudsman, Sandra Parker, called the response appropriate,
“This independent analysis will reduce the burden on the Fair Work Ombudsman, and subsequent cost to the taxpayer, for ensuring that Qantas back-pays its staff correctly.
“Viewed together, the back-payment bill, interest paid on underpayments, additional payments made to impacted staff and contrition payment impose a significant cost on Qantas.”
Qantas has until the end of April to fix the current underpayments and must complete an external review by mid-October.
Qantas’ Rob Marcolina hopes the matter can be put to bed as soon as possible.
“We realise this type of conduct by companies doesn’t meet community expectations, and it doesn’t meet our own commitment to our people or compliance.”