University of Melbourne to back pay staff $72m in landmark agreement
In an enforceable undertaking with the Fair Work Ombudsman, the university has admitted to a decade’s worth of underpayments affecting 25,000 staff across all faculties and campuses.
The University of Melbourne has agreed to repay $72 million to over 25,000 staff who were paid according to unlawful “benchmarks”, in the most comprehensive enforceable undertaking in the tertiary education sector’s history.
The university also agreed to make a $600,000 “contrition payment” to the government and implement measures to prevent future breaches from happening, the Fair Work Ombudsman said on Monday.
In exchange for signing the enforceable undertaking, the workplace watchdog said it had dropped the lawsuit it launched against the university in the Federal Court last year.
Ombudsman Anna Booth said the university was guilty of “systemic failures in compliance, oversight and governance processes” for over a decade, affecting casual and professional academic staff across all faculties and campuses.
But the commitments secured under the enforceable undertaking would help drive cultural change across the University of Melbourne and the wider tertiary education sector, she said.
“The University of Melbourne now accepts that it was unlawful that for many years,” Booth said. “Its casual academics adhered to ‘benchmarks’ which were inadequate and resulted in some employees not being paid for all hours worked.”
“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 to respond to feedback and to meeting all workers’ legal entitlements.”
The enforceable undertaking
According to the undertaking with the FWO, the University of Melbourne paid academics in the faculty of arts using “benchmarks” such as words-per-hour or time-per-student – rather than the actual hours they had worked – between 2014 and 2020.
After intervention from the National Tertiary Education Union in 2019, the university ceased the practice and began back payments to academic staff across the faculty.
In August 2020, the FWO launched an investigation into alleged non-compliance with enterprise agreements with staff. In December of that year, the university also began a remediation program to identify potential non-compliance with enterprise agreements.
The program identified $54 million in underpayments of 25,576 current and former employees between 2014 and 2024, with underpayments ranging from less than $1 to $150,881.
Six employees were underpaid more than $100,000, with most underpaid less than $5,000.
In signing the undertaking, the University of Melbourne acknowledged it underpaid a range of entitlements owed under enterprise agreements, including minimum wages and engagement entitlements, casual sessional teaching and casual non-sessional activities rates, shift loadings and overtime entitlements.
As a result, the university committed to repaying the $3.6 million in outstanding underpayments owed to staff and overhauling its human resources and payroll system by August 2025.
The university has already back paid over $51.6 million to 24,339 current and former staff, $4.4 million in superannuation and $12.4 million in interest. The 14 academics at the heart of the 2023 court case were among the workers who have been back paid in full, the FWO said.
The university also committed to establishing new governance mechanisms including a dedicated Employment Compliance Directorate to support a “culture of compliance” and create pathways for employees to raise wage concerns.
Booth said the undertaking showed that the FWO preferred to work with universities to address the systemic non-compliance issues in the sector.
“We’ve been very clear for several years that addressing the systemic issues in the university sector is one of our top priorities, and we look forward to working with the leadership teams at universities nationally to assist them to do the sustained, smart work required to ensure full compliance with workplace laws,” she said.
“The University of Melbourne deserves credit for acknowledging its governance failures and non-compliance issues, and for committing significant time and resources to put in place corrective measures to ensure both full remediation of its staff and a transformation for the future.”
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