An aged care provider has back-paid more than $1.3 million to 335 employees and signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman (FWO), with individual flexibility arrangements (IFAs) at the heart of the problem. EMA has flagged the dangers of IFAs before; however, this latest matter is a clear reminder of the practical implications of getting it wrong.
What Happened
In July 2024, Goodwin Aged Care Services (Goodwin), a registered charity providing aged care services in the ACT and NSW, self-reported to the FWO following an internal audit of its compliance with its enterprise agreement. The review revealed that IFAs with 313 of its employees did not leave employees better off overall, as required by the flexibility clause its enterprise agreement.[1]
The IFAs were freely entered into; however, because they relied on non-monetary benefits, the employees were subsequently rostered and paid at the base rate for:[2]
- up to 90 ordinary hours in a fortnight (the maximum being 76);
- up to 12 ordinary hours in a day (the maximum being 10); and
- shifts with only 8 hours between them (the minimum being 10).
Goodwin admitted contraventions of its enterprise agreement, and therefore section 50 of the Fair Work Act 2009 (Cth) (FW Act).[3] It has paid $1,395,359.73 to rectify the underpayments to 335 employees: $1,393,379.54 (including interest and superannuation) directly to employees, and $1,980.19 to the FWO for 13 employees who could not be located.[4] Individual back-payments ranged from $38,760 down to $2, with an average of $4,165. More than 75% of the underpaid employees were from a non-English speaking background and 10% were visa holders.[5]
The FWO acknowledged Goodwin’s cooperation and early disclosure, but still requires Goodwin to engage an FWO-approved independent auditor at its own cost (with a second audit possible), keep its Board regularly updated on compliance, and report to a Board subcommittee at least bi-annually on the number of IFAs and the terms they vary.[6]
Why IFAs carry risk
However freely an IFA is agreed, the FW Act requires it to leave the employee better off overall than if no IFA had been made.[7] Goodwin’s IFAs were freely entered into, yet they failed that test.[8]
Failing the better off overall test is a breach of the law, and the consequences go beyond back-pay. If an IFA does not leave the employee better off overall, the employer breaches the IFA clause in its agreement or award.[9] Goodwin admitted this, and therefore breaching section 50 of the FW Act, which allows a court to order compensation and penalties.[10] Goodwin also paid interest on the wages owed and must notify its employees.
The exposure can also be large. IFAs with 313 employees failed the better off overall requirement, and the contraventions ran from 2 July 2018 to 16 March 2025.[11] The FWO has said migrants and visa holders are a priority, and it is also focused on aged care: its recent investigations of 22 providers recovered more than $5.3 million for nearly 3,600 workers.[12]
Takeaways for Employers
- Audit – Identify every IFA and re-test it against the award or agreement using the employee’s actual roster, including overtime, penalty rates and breaks between shifts. The FWO has urged aged care providers to undertake regular wage compliance audits, including of IFAs.[13]
- Document – Record how each IFA leaves the employee better off overall. Treat each IFA as an individual agreement, not a template: Goodwin has updated its base IFA template, and IFAs are meant to be individual.[14]
- Govern – Review each IFA at least annually. Check that payroll systems are configured correctly.[15]
- Fix – If an IFA fails, replace or terminate it, rectify any underpayment with interest and superannuation, and seek advice. The FWO acknowledged Goodwin’s cooperation and early disclosures.[16]
Require further information/assistance?
This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, including a review of your casual engagement arrangements or assistance responding to an employee choice notification, please contact your Consultant.
[1]Enforceable Undertaking given by Goodwin Aged Care Services Limited and accepted by the Fair Work Ombudsman on 18 September 2026 (EU) cll 4–5.
[2]EU cl 5.
[3]EU cl 11.
[4]EU cl 13, sch A.
[5]Fair Work Ombudsman, ‘Goodwin Aged Care Services signs EU after $1.39m underpayments’ (Media Release, 22 September 2026) (Goodwin Media Release).
[6]EU cll 8, 19, 21–24, 31, 43.
[7]Fair Work Act 2009 (Cth) ss 144(4)(c), 203(4).
[8]EU cl l 5.
[9]FW Act ss 204(3) (enterprise agreements), 145(3) (awards).
[10]EU (n 1) cl 11; FW Act ss 50, 545–546.
[11]EU cll 5, 11.
[12]Goodwin Media Release.
[13]Goodwin Media Release.
[14]EU cl 16.
[15]EU cll 17(d)–(e), 19(a).
[16]EU cl 8.
