Employment Department admits it underpaid 99 staff more than $62,000

The Employment Department has told a Senate estimates hearing it is yet to pay back more than $60,000 to 99 staff after underpaying them for more than a year.

Michaelia Cash described the underpayments as “extraordinary episode”.

The Department of Employment and Workplace Relations underpaid 99 staff more than $62,000 between July 2022 and August 2023, and spent nearly $200,000 on legal advice and data analysis in order to rectify the underpayments.

Secretary of the Department, Natalie James, told a Senate estimates hearing that she was first informed of the underpayments more than four months ago on June 15, told the minister’s office on July 25 and advised staff and the Community and Public Sector Union of the error on August 11.

But, as of Wednesday morning, departmental officials revealed that the 99 impacted staff had still not received any of their owed backpay after more than a year of underpayments.

The revelations come as the government seeks to push through its second tranche of industrial relations reforms which seek to expand wage theft laws including a fivefold increase in maximum penalties and criminalisation of under­payments.

Ms James said the owed funds were being processed and would be delivered as soon as this week’s pay run under questioning from opposition workplace relations spokeswoman, Michaelia Cash, who described the underpayments as an “extraordinary episode.”

The department’s deputy secretary and chief operating officer for the corporate and enabling services group, Deborah Jenkins, revealed the total amount owed in backpay was $62,926.52.

Ms Jenkins said the average repayment was $635.25 and ranged in value from $8.89 to $4,051.07. Of the 99 staff who are owed money, 93 are still employed by the department while six are former employees.

Ms Jenkins said that, after learning of the underpayments, the department spent $119,625.47 on legal advice and a further $75,866.34 on data analysis to understand what went wrong. The period of underpayments stretched from July 7 2022 through to August 11 2023.

Ms James told the committee hearing the payment error was the result of complexities around the machinery of government changes which had led to the creation of the department on July 1, 2022.

She said the complicating factor was that staff were coming from other areas of the bureaucracy to work for a newly created entity that had only recently been established. Ms James said this was a problem unique to the public service and would not be encountered by small businesses.

“When people move to a new and established department, the rules in the Public Service Act apply as follows: the (enterprise) agreements .... of the receiving department apply to those staff. There is a capacity under the Public Service Act, under section 24, to make a determination to vary, but only in a beneficial way, how those agreements apply,” she said.

“So, let’s say for example, you’re the Department of Education and you receive some people from the Department of Industry. And some of the people in the Department of Industry are paid more at certain classifications.

“Then a determination under section 24 can be used to preserve those higher pay rates of the incoming staff who will otherwise be covered by all other terms and conditions of the enterprise agreement.”

However, Ms James said the situation was “different when you create a brand new entity.” “People will move into that entity. But none of the conditions that they bargained for, with the conditions that they are used to, apply. And so you are effectively at ground zero. The relevant industrial instrument is the public service award.”

Senator Cash said that, if the department responsible for employment and workplace relations struggled to pay its staff correctly, then “what hope do small businesses have?’’

“Ms James admitted that complexity was the issue – which is exactly the challenge facing tens of thousands of small and medium businesses in this country,’’ Senator Cash said.

“This government is only making the workplace relations system more complex and confusing with their radical industrial relations laws,’’ she said. “Unfortunately, most businesses do not have the resources to pay lawyers and consultants tens of thousands of dollars to sort through such issues.”

Labor Senator Murray Watt, representing the Minister for Employment and Workplace Relations, Tony Burke, also told the hearing that “wage underpayment should not occur in any circumstance.”

“And where those wage underpayments are intentional of course we have legislation before the parliament to deal with that,” Senator Watt said. “The other obvious thing to say is that where those underpayments are detected they should be remedied at the first available opportunity.”