Regis Healthcare admits $30-$40 million in staff underpayments

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The ASX-listed provider has announced that it has identified potential underpayments of employee entitlements to certain current and former employees under its enterprise agreements of between $30 to $40 million in total.

Its stock, at one stage, fell 8.10% to $1.93 before recovering slightly. Regis Healthcare rejected a $555 million offer for the business last November.

The payment shortfalls occurred because some employee entitlements due under various enterprise agreements were recorded inaccurately in the payroll system, which caused incorrect payments to a number of employees, Regis Healthcare said in a statement.

Regis Healthcare, which has notified the Fair Work Ombudsman, has brought in external advisors to determine the extent of the underpayments.

“While this review is ongoing, based on preliminary analysis, Regis estimates that potential underpayments due to current and former employees (looking back six years) could be in the range of $30-$40 million,” said the residential aged care provider, which has o6,753 operational places across 60 facilities located in Victoria, QLD, WA, NSW and SA.

“While we are deeply disappointed this has occurred, our priority is to identify the amounts owed to our people and paying those amounts as soon as our review is complete. We are also upgrading our payroll system and improving internal processes to mitigate the risk of such issues recurring. Our Board is meeting regularly to monitor progress and ensure remediation occurs in a timely manner. I would like to offer my apologies to our people affected by this issue,” said Regis Healthcare Director and CEO, Dr Linda Mellors.

The company based in Armadale, 7km southeast of Melbourne’s CBD, said the impact of the underpayments on profit before income tax for the financial year ended 30 June 2021 is estimated to be in the range of $6-$7 million with the remaining amount to be recorded as a prior period restatement in accordance with Australian Accounting Standard AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.

A number of aged care providers have repaid staff in recent years after underpayments were recovered including Australian Unity, BaptistCare NSW & ACT and Uniting.