Julia, Janelle, Shane and Kirsten - some of the staff at Paul Sadler Swimland Essendon who have banded together after discovering they had been underpaid by the company. Credit:Jason South Many also did not receive pay for long-service leave despite working at the company for more than seven years. As well as underpaying staff, the enterprise agreement required them to renew their contracts every 10 to 12 weeks and included a flexibility agreement which reduced the minimum shift rate to 1½hours from three hours under the award. At most Paul Sadler centres parents pay between $20 and $25 for a half-hour lesson, which involves five other students, raising up to $153 a session. Some instructors are paid less than $10 for that half-hour session. It makes for a profitable business. On Friday, the Australian Workers' Union filed an application to the Fair Work Commission to determine whether the individual flexibility arrangements employees of Paul Sadler Swimland were asked to sign complied with the Fair Work Act.

Swimland has 15 swimming schools. Credit:Andrew Quilty The company's chief executive, Wayne Pollack, said it had apologised to staff for the error, but he would not reveal the size of the total underpayment. He confirmed that all sites had been audited and underpayment issues had been found. He said more than 85 per cent of staff had been repaid. It is the latest franchise network to get caught up underpaying workers. They include 7-Eleven, which was caught paying workers as little as $5 an hour, Caltex, Pizza Hut, before it was sold late last year, and United Petroleum. Illustration: Matt Golding Current and former workers contacted by Fairfax Media said they felt let down by the company.

Michael Schoofs, who joined the Paul Sadler Swimland operation at Essendon in 2009, when he was 17, said he was disappointed that it had taken so long for the company to acknowledge and fix the problems. "Who tries to screw over teenage employees?" he said. A young swimmer perfects his backstroke at Paul Sadler Swimland. Credit:Rob Gunstone Mr Schoofs has been repaid more than $10,000 and is now working in London after leaving the company in July. Some workers have formed a Swimland Instructors Association (SIA) in conjunction with the Australian Workers' Union to give workers a voice as they negotiate a new enterprise agreement. Kirsten Micallef, who has worked for the company for 20 years, said she had decided to join the SIA "to make it better not only for us, but for future teachers".

Ms Micallef is one of 100 current and former workers at the Essendon site who have been paid more than $250,000 in back pay. Other sites, including Hoppers Crossing, are speculated to have underpaid by as much as $130,000, while Roseville is understood to have underpaid its workers by an estimated $120,000. Speaking from the United States, Mr Pollack said the underpayments were the "combined result of poor manual processes and human error". He said the audit had found that some staff had been overpaid, but they hadn't been asked to repay that money. He couldn't confirm the number of workers who had been overpaid. He said the company was rolling out a new automated payment system in the new year to ensure workers were not underpaid. "Our company has been going for 44 years. It prides itself on overpaying people," he said.

He said the company became aware of the "error" in late 2015. "After an investigation at Essendon, we conducted an audit of our manual payroll systems at all our Australian centres and confirmed that details had not always been updated, resulting in a number of employees between 2010 and 2013 being unintentionally underpaid," he said. Mr Schoofs said he had first discovered the company was underpaying him in January 2015, when holidaying with nine other employees. He said the company took action only after staff got together and wrote a letter requesting a formal inquiry into the back pay. A letter written by founder Paul Sadler sent to staff on December 13 describes 2016 as "quite a challenging year" and a time to reassert "our values". He said 85 per cent of staff had been repaid.

The Fair Work Ombudsman has been working with the company since October. The company and staff are renegotiating the enterprise agreement, which the AWU Victoria assistant branch secretary Liam O'Brien described as a sophisticated effort to "game" the system and the better off overall test to deny workers certain terms and conditions in return for a higher hourly rate. "This flattening out of their labour costs was advantageous to a business that charges a flat rate for lessons, whether on a weekday or weekend," he said. "However, the higher hourly rate (10 per cent above award) failed to provide sufficient compensation. That should have meant that it did not pass the better off overall test." Mr O'Brien also criticised the individual flexibility agreements. Mr Pollock defended the company's current enterprise agreement, saying it was fair, left the majority of workers better off through extra annual leave days and provided staff with the flexibility they desired.

The company is also working on a new enterprise agreement, which Mr O'Brien says is very similar to the one that is in place.