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Listed airline Qantas (ASX: QAN) has signed a Court-Enforceable Undertaking (EU) with the Fair Work Ombudsman (FWO) requiring it to repay staff for entitlements not paid.
The EU is the result of an FWO investigation and could see hundreds of staff being back paid millions of dollars.
The FWO investigation arose after Qantas self-reported that it had incorrectly paid marketing and administrative staff in accordance with the terms of individual contracts of employment, rather than the relevant enterprise agreements that covered and applied to them.
Under the EU, an expert will conduct its own review of the underpayments, which is due to be completed by 14 October 2020, and report those results directly to the FWO.
To date, Qantas has back paid $7.1 million to 638 employees who were underpaid during June 2011 and June 2019.
The airline has paid interest on all back payments so far using an interest rate of six per cent above the RBA cash rate, and an additional payment of $1,000 to affected workers, for a total of $2 million.
Any further underpayments identified by the expert will be repaid with interest, an additional payment of $2,000 to affected employees, and attract a higher contrition payment of seven per cent.
Fair Work Ombudsman Sandra Parker says Qantas fully cooperated with the FWO investigation.
"Qantas has come forward and admitted to breaching the Fair Work Act for several years and significantly underpaying hundreds of its employees several million dollars," says Parker.
"The EU creates a robust process where an independent expert will verify that employee back payments are correctly calculated and paid by Qantas. Three further pay audits will also be conducted by an independent auditor, which will benefit Qantas' current and future employees."
In addition to the expert's investigation, Qantas is required to set up an independent employee hotline and complaints system within 30 days.
The company must also directly apologise to affected employee and place public notices on its intranet, website, and Facebook page for one month, as well as in national newspapers.
Shares in Qantas are down 8.79 per cent to $3.32 per share at 10.53am AEDT.
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