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Education giant G8 admits huge bill for potentially underpaying up to 27,000 workers

Early childhood education provider G8 has been hit with a bill of between $50 million and $80 million as a result of underpayments that could affect up to 27,000 workers.

Dec 08, 2020, updated Dec 08, 2020
Education group G8 announced a big annual loss.

Education group G8 announced a big annual loss.

The announcement came a day after the Federal Government announced plans to introduce a raft of new workplace laws including potential jail terms for employers who deliberately underpaid staff. G8 said its issue was inadvertent.

G8, which runs more than.470 early learning centres across the country, said its compliance review launched in August found that 27,000 former and current employees were being reviewed for “potential remediation”.

The revelation has sent G8’s shares down 5.8 per cent this morning. G8 is also facing a class action in which it has been claimed that between May 2017 and February 2018 it contravened its continuous disclosure obligations by failing to disclose to the market information relevant to its full-year 2017 financial performance and that it engaged in misleading or deceptive conduct.

Chief executive Gary Carroll said the company deeply regretted the error.

“We apologise unreservedly,” Carroll said.

“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 commitment to our people _ particularly during the enormous challenges of the past year _ is the key to our success.

“We are determined to ensure this issue can never be repeated.”

The company said its review “identified potential inadvertent non-compliance with some requirements of the Children’s Services Award and the Educational Services Award for a number of the group’s team members in Australia”.

The issue related to overtime, minimum engagement periods and agreed hours of work and allowances. After tax the bill is likely to be between $35 million and $56 million. Those affected will also be paid interest and superannuation.

“In many cases the issues arose due to insufficient documentation of agreed hours,” G8 said in a statement to the ASX.

“The cohort of current and former team members being reviewed for potential remediation is approximately 27,000, however, the final number affected will be determined during the remediation program.”

The relevant period covers a six and half year time frame starting on July 1, 2014.

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G8 also reported its year to date earnings before interest and tax was $98 million, which included current year employment costs relating to the wage remediation program.

 

 

 

 

 

 

 

 

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