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Southern Cross Care Repaid $10 Million. The 5 Payroll Failures That Got Them There.
Seven years. 5,500 affected employees. More than $11.7 million in underpayments — with $10.1 million already repaid to 3,603 employees, and further payments still underway.
That's the scale of the payroll underpayment issue that Southern Cross Care (NSW & ACT) — a major not-for-profit aged care provider — uncovered through an internal audit in 2023. The organisation voluntarily disclosed the problem to the Fair Work Ombudsman, and signed an Enforceable Undertaking in April 2026.
I want to be clear: voluntary self-identification and proactive remediation matter. Southern Cross Care did the right thing once the problem was found. But the more important question for finance and payroll leaders across the NDIS and aged care sector is this: how did it happen for seven years without being caught?
The Fair Work Ombudsman's findings point to a clear set of systemic failures. And this week, with a separate Full Federal Court ruling on SCHADS Award sleepover entitlements also landing, it's a timely moment to run through what went wrong — and what your organisation should be checking.
⚠️ Compliance Alert: SCHADS Award Sleepover Ruling
In a recent Full Federal Court decision (Fair Work Ombudsman v Jats Joint), the Court dismissed an appeal and confirmed that a "sleepover" is not a shift, and that penalties and loadings are calculated separately for ordinary hours on either side of a sleepover. In April 2026, the Fair Work Commission also varied the SCHADS sleepover provisions. The legal and award position in this area continues to evolve — if your rostering or payroll setup has not been reviewed against the current SCHADS Award and recent case law, now is the time to do so.
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$11.7M+
Total underpayments identified at Southern Cross Care (NSW & ACT), affecting 5,500 employees — with $10.1 million already repaid to 3,603 employees
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7 Years
Duration of underpayments — from July 2017 through to October 2024 — before a 2023 payroll audit triggered disclosure and remediation
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$358M
Total wages recovered by the Fair Work Ombudsman across all employers in 2024–25, from over 249,000 underpaid workers
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60%
Of FWO 2024–25 recoveries attributed to large corporate sector employers — a clear signal that scale does not insulate organisations from payroll risk
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Failure 1: A Time and Attendance System That Didn't Match Reality
The Fair Work Ombudsman identified deficiencies in Southern Cross Care's time and attendance system as a primary driver of the underpayments. The system wasn't capturing worked hours accurately enough to support correct award calculations — particularly for penalty rates, shift loadings, and overtime.
This is more common than most organisations want to admit. Time and attendance systems that were set up years ago, against a different version of an award or enterprise agreement, often carry legacy configurations that haven't kept pace with changes. The system produces outputs that look reasonable, so no one questions them — until someone does.
The check: When did you last audit your time and attendance system configuration against your current enterprise agreement or award? Not whether it's producing numbers — but whether those numbers are based on the right rules.
Failure 2: A Manual Payroll Process That Couldn't Keep Up
Alongside the system issue, the Ombudsman found that the manual payroll processes in place were inconsistent with the organisation's enterprise agreement requirements. Manual processes create gaps — between what the agreement says and what the payroll run actually does.
In high-volume, multi-site environments like aged care and NDIS operations — where rosters shift, employees work across multiple locations, and award conditions can vary based on hours worked and shift timing — manual intervention in the payroll process is a liability. Every manual step is a point where an error can enter the system and then compound over years.
The check: Map your payroll process end to end. Where does a human make a decision or override a system calculation? Each of those points deserves scrutiny.
Failure 3: Award Interpretation Gaps in a Complex Award Environment
The SCHADS Award — which covers most of the community services, home care, disability services, and aged care workforce — is one of the most operationally complex awards in the Australian system. Penalty rates vary by time of day, day of week, and shift type. Overtime rules interact with part-time guarantees. Sleepover conditions sit alongside active shift conditions.
The incorrect payments in Southern Cross Care's case included overtime, penalty rates, shift loadings, annual leave loading, and allowances — which tells you the interpretation gaps weren't in one area. They were spread across the award.
The SCHADS sleepover ruling this week is a direct example of why interpretation matters. The Full Federal Court has now confirmed the legal position clearly. But for organisations that have been paying on a different assumption, that clarification may require a retrospective review.
The check: When did your payroll team last do a formal review of SCHADS Award interpretation against how your system is actually calculating? Not just "we're on SCHADS" — but a clause-by-clause reconciliation of your payroll rules against the current award version.
Failure 4: No Early Warning Signals in the Finance Function
Underpayments that run for seven years don't remain invisible because the evidence isn't there — they remain invisible because no one is looking for it in the right way. In the Southern Cross Care case, the issue was only identified after an employee query prompted a payroll audit in 2023.
The finance function has a role to play here that often goes unfulfilled. Payroll cost as a percentage of revenue, average cost per hour worked by role type, overtime as a percentage of total labour cost — these are the metrics that, when tracked consistently, start to reveal anomalies. If your actual labour cost per hour is consistently lower than it should be based on award rates, that's a signal worth investigating, not filing away.
The check: Does your management reporting pack include payroll analytics that would surface a systematic underpayment? Or does it just report what was paid?
Failure 5: Governance Without Accountability
The Enforceable Undertaking the Fair Work Ombudsman put in place for Southern Cross Care goes beyond repayment. It requires the organisation to replace its payroll systems, commission an independent compliance audit, and strengthen governance and oversight arrangements. That last point is telling.
Governance arrangements that don't include specific, regular payroll compliance reviews are governance arrangements that leave payroll risk unmanaged. It's not enough to have policies. Someone — with authority and access — needs to be accountable for payroll accuracy on an ongoing basis.
For finance leaders, this means ensuring payroll compliance isn't purely a payroll team responsibility. The finance function needs to be involved in oversight — reviewing control frameworks, commissioning periodic audits, and escalating concerns when something doesn't add up.
The check: Who in your organisation is accountable for payroll compliance — not just payroll processing — and when did they last formally attest to the accuracy of your payroll controls?
📎 Related Reading
If you're thinking through the cash flow implications of Payday Super alongside this, my earlier post on getting payroll infrastructure right before 1 July is worth revisiting: Payday Super Is Six Weeks Away: The Cash Flow Reality Check Every Payroll Manager Needs Now.
Southern Cross Care self-identified, self-reported, and has done the hard work of remediation. That counts for something, and the Fair Work Ombudsman's approach reflects that. But the real lesson for finance teams across the sector isn't about what happens after you find a problem. It's about building the systems, controls, and oversight to find problems early — before they compound for years.
Concerned about what a payroll audit might find in your organisation?
PFL works with NDIS providers and aged care operators to review payroll control frameworks, identify compliance gaps, and build the governance structures that prevent a small error from becoming a seven-year problem.
Talk to PFL →Timothy, CPA is Managing Director of Professional Financelink (PFL) — senior-level outsourced finance, management reporting, and AI automation for Australian NFP, NDIS, and SME organisations. With 20+ years in finance leadership across NFP, NDIS and SME sectors, he has worked extensively in SCHADS-covered operational environments.
SOURCES
- Fair Work Ombudsman — Southern Cross Care (NSW & ACT) signs Enforceable Undertaking — April 2026
- Fair Work Ombudsman — Annual Report 2024–25: $358 million recovered for 249,000+ workers
- Fair Work Library — SCHADS Award: Sleepover provisions and recent case law (including FWC variation, April 2026)
- Fair Work Commission — Social, Community, Home Care and Disability Services Industry Award 2010
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