Listed childcare centre owner G8 Education says it has enough cash on hand to cover an underpayment bill for 27,000 workers that could stretch to as much as $80 million.
Following a compliance audit, G8 found it had been paying under the award since July 1, 2014. The group has self-reported to the Fair Work Ombudsman.
The company described the underpayment as “potential inadvertent non-compliance with some requirements” of the award covering childcare workers. It apologised to its staff for the errors.
“The issues identified primarily relate to payment for overtime, minimum engagement periods and agreed hours of work and allowances. In many cases, the issues arose due to insufficient documentation of agreed hours.”
G8 said a preliminary assessment indicated it had underpaid its workers between $50 million and $80 million since July 1, 2014. It said it expects the after-tax cost to be between $30 million and $60 million.
G8 Education owns about 470 childcare centres around the country that operate under 21 different brands. Some of its brands include First Grammar, Creative Garden, Community Kids, Kinder Haven, Great Beginnings, Early Learning Services and Penguin Childcare.
G8 has started a full remediation program. It expects the backpay program to complete by July 31, 2021.
Chief executive Gary Carroll apologised unreservedly to affected staff members. “As soon as we identified and quantified this issue, we initiated a remediation program to ensure they will be paid every dollar they are owed.
The Australian Centre for Corporate Responsibility (ACCR) warned the underpayment problem at G8 could flow into its bottom line and raised questions about its governance.
“Any loss of confidence by families in the company will have a ripple effect that will damage return to shareholders now and into the future,” said the ACCR director workers’ rights Katie Hepworth.
Helen Gibbons, the executive director of early education at the United Workers Union, said she was horrified at the extent of the issue at G8 Education.
“Certainly we knew there were significant issues at G8 Education but to hear the extent of the underpayment is between $50 million and $80 million is horrifying,” Ms Gibbons said.
“This is a really large, ASX-listed company that has been making profits and some of those profits have been from the wages of low-paid workers.”
The government announced plans on Tuesday to slug businesses that underpay their workers with much tougher penalties, with “serious” contraventions by big business triggering fines of up to $666,000 or three times the benefit the company got from its underpayment, whichever figure is higher.
Several large companies have been reviewing their adherence to relevant worker awards after big employers such as Woolworths, the Commonwealth Bank, Coles and Qantas discovered their workers had not received the entitlements allowable under the award.
