The payroll mistake costing aged care millions

When Southern Cross Care (NSW & ACT) self-audited in 2023, they discovered underpayments to staff worth millions of dollars.

The Not For Profit reported the non-compliance to the Fair Work Ombudsman within months.

Southern Cross Care (NSW & ACT) has now entered an Enforceable Undertaking with the Fair Work Ombudsman to rectify more than $11.7 million in underpayments, including interest and superannuation, to 5,500 staff on 2 April.

The errors were caused by the operator’s time and attendance system and a manual payroll process that was inconsistent with enterprise agreement requirements.

Employees were underpaid overtime, weekend penalties, shift loadings and annual leave loading, as well as other entitlements owed under the enterprise agreements. The underpayments were for the period from July 2017 to October 2024.

Affected workers included home care employees, assistants in nursing, registered and enrolled nurses, facility managers, diversional therapists, cooks and handypersons. Staff employed on a casual, full-time and part-time basis were included.

To date, the operator has back-paid 3,603 employees a total $10,135,122 including interest and superannuation.

Back-payments to underpaid individual employees range from less than a dollar to $44,593, including superannuation and interest. The average back-payment was $1,716.

If Southern Cross Care (NSW & ACT) can’t find the employee within 60 days, the outstanding amounts will be paid into the Commonwealth Consolidated Revenue Fund.

Everyone has an underpayment

StewartBrown Partner Siobhain Simpson told the accounting firm’s October 2025 National Finance Forum that the “extraordinary complexity” of modern payroll systems has seen underpayment increasingly common in recent years.

Added to this is the complexity of the Aged Care, SCHADS and Nurses Awards.

Directors have an obligation to ensure organisations have systems in place to mitigate the risk of underpayment, but Siobhain conceded every organisation at the forum would have an underpayment “whether you know it or not”.

“Maybe you’ve had one in the past. You will have one in the future because there is no way to entirely control payroll with the IT systems that we have today,” she said, adding she hoped AI might offer a solution in the future. See the full presentation below.

Of the $4.9 billion in payroll expenses that StewartBrown has tested, the compliance error rate was 58.2%.

“That is a high error rate,” Siobhain said.

Self reporting and cooperation

Fair Work Ombudsman Anna Booth said Southern Cross Care (NSW &ACT) cooperated with the investigation and showed commitment to rectifying the underpayments and preventing them from occurring again in the future.

Under the Enforceable Undertaking, as well as the repayments, the operator must:

• replace its time and attendance system;
• commission an independent audit at its own cost to check its compliance with workplace laws;
• provide training for all employees on the proper use of the new time and attendance system, and regularly report to the board about compliance; and
• establish several means for employees to voice their views and experiences, including surveys, an anonymous feedback form, monthly team meetings and an external hotline for whistleblower complaints.

Southern Cross Care (NSW & ACT) has 27 retirement communities, and 27 residential care homes in NSW (in Sydney, the Central Coast, Far North Coast, Riverina, and South West Slopes) and the ACT.