Australian Public Service departments put on notice of underpayment risk

Following the Fair Work Commission's decision to award a 5.75 per cent pay rise to workers on the minimum wage, the Australian Public Service Commission has written to APS employers to remind them of their obligation to pay staff correctly.

"Agencies should ensure that employees are paid at least the new minimum pay rates," the APSC said, citing as an example an increase in the hourly rate for APS Level 1 workers from $24.25 to $25.64 from July 1.

"The hourly base rate of pay for an employee must not be less than the hourly base rate payable under the award which covers that employee," the Commission said.

The advice has been issued just as new APS Commissioner Gordon de Brouwer has started in his role and comes in the midst of bargaining between unions and agency representatives over the Commonwealth's latest pay offer.

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The APSC said that as a result of the Fair Work Commission's decision, the National Minimum Wage will rise by 8.6 per cent to $23.23 an hour while those on modern award minimum rates will receive a 5.75 per cent pay boost.

It said agencies should make sure their payroll systems are up to date and accurate "to avoid any potential for underpayments".

While the public service has largely avoided big underpayment scandals of the kind that rocked former Masterchef judge George Calombaris, whose restaurant chain was found to underpaid staff by almost $8 million, there have been instances in the APS.

In 2021, it was revealed the Department of Social Services underpaid 68 former and current staff more than $400,000 over almost five years.

The National Library of Australia also handed out almost $250,000 in backpay to 106 current and former staff after it was found to have failed to pay correct weekend and public holiday penalty rates. In some instances it was forced to reimburse $20,000.

In 2020, the APSC warned of the risk of underpayment and advised agencies to regularly audit payroll procedures and information and liaise with any external payroll providers to ensure they are operating correctly.

Agencies that become aware of a serious error are obliged to report it to the Fair Work Commission, the APSC said.

The underpayment warning came as the government and public sector unions were embroiled in negotiations over the latest Commonwealth pay offer.

The government initially offered a 10.5 per cent pay rise spaced over three years, including 4 per cent in the first year, 3.5 per cent in the second year and 3 per cent in the third year.

But a ballot of 15,000 Commonwealth and Public Sector Union members overwhelmingly rejected the offer.

The public sector union has previously called for a 20 per cent pay rise over three years, including 9 per cent in the first year.