Singtel Optus self-reported the underpayments by Optus Retail, which operates the telco's Australian retail stores, to the Fair Work Ombudsman in April 2021 following an internal review.
Underpaid employees included retail consultants and store managers between January 2014 and March 2020.
They missed out on entitlements including weekend and public holiday penalties, meal allowances, overtime and annual and personal leave.
Optus also incorrectly calculated the mandated six-monthly reconciliations for employees who worked in stores that operated with extended trading hours.
The issue was blamed on poor payroll and time and attendance systems, human resources and governance practices.
Optus is paying back 3744 current and former employees more than $7.8 million, which includes $5.4 million in wages and entitlements and $2.4 million in superannuation and interest.
The payments range from $11 to $34,000 with the average sum being $2100.
Australia's second-largest telco has also been ordered to assess and back-pay impacted retail consultants and store managers and six-monthly and annual reconciliations between January 2020 and July 2023.
Ombudsman Anna Booth said the matter acts as a warning for employers to prioritise ensuring they are meeting their workers' lawful entitlements.
"Optus Retail's lack of investment in human resources and poor governance led to long-term breaches and underpayments of its staff and large rectification costs," Ms Booth said.
"Boards must treat the lawful payment of their employees as a core governance requirement."
The company will commence an independent audit and additional compliance training, and improve payroll systems and processes after it entered into an enforceable undertaking with the Ombudsman, Optus executive Kate Aitken said.
"We have acknowledged that we did not comply with our obligations under the Fair Work Act 2009," Ms Aitken said.
"With the support of external experts, we have calculated the underpayments owed to current and former employees and have made every effort to ensure all entitlements have been or are in the process of being corrected and paid with interest."
As part of the undertaking, the telco will have to pay an initial contrition payment of $450,000 to the Commonwealth's Consolidated Revenue Fund.
Optus will also make another contrition payment of four per cent of the total underpayments found in the next review under the terms of the undertaking.
The company will also be required to apologise in writing and establish a helpline for current and former employees who were impacted.
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