University of Melbourne Agrees to Pay $72 Million Staff Underpayments Settlement

University will also undergo significant reforms to improve its workplace compliance systems, including measures to prevent future underpayments.

Signage for The University of Melbourne is seen in Melbourne, Australia, on Nov. 2, 2022. AAP Image/James Ross

The University of Melbourne has agreed to pay back $72 million (US$46 million) to more than 25,000 staff who were underpaid between 2014 and 2024, concluding an investigation by the Fair Work Ombudsman (FWO).

As part of the agreement, the university will undergo significant reforms to improve its workplace compliance systems, including measures to prevent future underpayments.

In a statement, the University of Melbourne confirmed that it would complete $72 million in payments, including superannuation and interest.

The final stages of the university’s wage remediation program are now underway, with payments expected to be completed by mid-2025.

Interim Vice-Chancellor Professor Nicola Phillips expressed regret and repeated the university’s apology to the affected employees.

“The university is now administering the final phases of its wage remediation program ... The university again expresses its sincere regret and reiterates its apologies to affected staff members,” she said.

The remediation program has already identified $54.05 million in underpayments, with affected employees receiving back-payments that range from small sums to as much as $150,881.

While most of the compensation has been paid, about $3.6 million in underpayments remain to be settled.

A Comprehensive Enforceable Undertaking

As part of the settlement, the University of Melbourne has entered into an enforceable undertaking with the FWO, the most comprehensive of its kind in Australian university history.

This undertaking includes a $600,000 contrition payment to the Commonwealth Consolidated Revenue Fund, alongside broader commitments to systemic reforms aimed at improving employment compliance across the university.

FWO Anna Booth said the commitments outlined in the undertaking would help drive cultural change across the sector and would serve as an example for universities and large employers nationwide.

“The University of Melbourne deserves credit for acknowledging its governance failures and non-compliance issues,” said Booth.

“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.”

Systemic Failures and Future Reforms

The underpayments largely affected casual academics, who were paid based on “benchmarks” rather than actual hours worked. The FWO’s investigation revealed that the university had regularly failed to pay staff for hours of marking, teaching, and other academic work.

The university has since committed to addressing these systemic failures and implementing wide-ranging reforms, including the development of a new enterprise resource planning system to ensure compliance with wage laws.

Booth said that addressing systemic issues in the university sector is one of the FWO’s top priorities.

Melbourne Uni to Drive Wage Compliance Changes

The University of Melbourne has agreed to share its learnings with other universities and take a leadership role in driving sector-wide compliance.

The reforms include the creation of a new Employment Compliance Directorate, the establishment of subcommittees focused on workplace relations, and extensive staff training to ensure that employees are aware of their rights and can raise concerns about wages.

The university’s new commitment to governance will include centralised oversight of wage compliance, with a focus on corporate responsibility and continuous improvement.

Additionally, a worker voice mechanism will be introduced to allow employees to communicate directly with the university’s executive team about wage and entitlement issues.