Fair Work Ombudsman launches inquiry into underpayment in the disability services sector

After receiving 2500 tip-offs, the Fair Work Ombudsman has launched a major investigation into underpayment in the disability services sector.

Thousands of disability sector workers have been underpaid at least $68 million, triggering a “historic” official investigation into the full scale of the rort.

The Fair Work Ombudsman on Tuesday said it was launching an inquiry into the sector after getting about 75,000 disability support services inquiries and 2500 anonymous reports.

“The FWO has serious concerns about workplace laws compliance in the disability support services sector,” a spokeswoman said.

Its multi-year FWO inquiry will start by speaking with workers, managers, directors, digital platform providers and clients who require disability support services in an effort to find out what is driving underpayments.

While the FWO has recovered about $68m for short-changed employees since 2020, unions expect the true extent of the problem is far greater.

Thousands of disability sector workers have been underpaid at least $68 million. Picture: iStock

Australian Services Union secretary Angus McFarland described the FWO inquiry as “historic” and timely, given the problem was growing rapidly.

“We suspect that our own investigations have just scratched the surface of a bigger problem that the Fair Work Ombudsman is well positioned to expose and address,” Mr McFarland told this masthead.

“We have already referred 34 dodgy NDIS providers to the Fair Work Ombudsman this year. There are over 50 additional providers in NSW alone that we are currently investigating for serious breaches and will share with the FWO as part of their inquiry,” he said.

“This is a growing problem in the NDIS and tarnishes the reputation of the entire sector where the vast majority of employers are paying their workers correctly.”

Instances of underpayment range from tiny operators to major companies.

One of Australia’s largest private hospital operators and healthcare providers, Healthscope, underpaid hundreds of disability service staff by more than $20m.

In another significant breach, disability employment program provider Activ Foundation underpaid 1700 disabled workers more than $13m, according to the FWO.

One was short-changed more than $50,000.

Australian Services Union secretary Angus McFarland. Picture: Supplied

In 2023, the FWO reported that another disability support provider, Aruma Services Limited, had back-paid Victorian staff more than $6.5 million, after underpaying about 1000 employees between 2017 and 2021.

A large Queensland disability support charity, Open Minds Australia, also backpaid staff about $4.2m in 2024 after breaching its own collective agreement by underpaying staff.

The ASU, the largest union for workers in the NDIS, said more government regulators needed to improve the way they worked together.

“We think there needs to be greater co-ordination and action between NDIS regulators with the Australian Taxation Office, Australian Securities and Investments Commission and FWO to crack down on these unscrupulous actors, drive them out of the industry and impose criminal sanctions,” Mr McFarland said.

“This sector investigation from FWO is a critical first step and will help restore integrity and trust in the NDIS itself.”

Originally published as Fair Work Ombudsman launches inquiry into underpayment in the disability services sector