WA’s largest disability service provider has been sanctioned after it underpaid 1,700 disabled workers more than $13 million.

Activ Foundation provides disability services such as employment, training, and education at 100 locations across WA.

Activ Foundation self-reported to the Fair Work Ombudsman the underpayment of its employees, after discovering two years ago that 1,695 current and former employees in its disability employment program were being paid incorrectly.

Activ admitted to underpaying workers for six years from December 2011 to December 2017.

The Fair Work Ombudsman has now issued a court-enforceable undertaking to Activ requiring them to back pay wages in full, and pay a $20,000 contrition payment to WA-based disability organisations.

The company says it used a wage assessment tool to measure the productivity of staff and pay a pro-rata wage based on this assessment. However, it made changes to the tool that meant it was no longer assessing people properly.

The Supported Employment Services Award allows workers to be paid much less than the normal award wage, sometimes as little as 80 cents an hour.

WA Senator Jordon Steel-John said it is all wrong.

“This is a criminal abuse of their workforce, this is totally unacceptable,” he said.

He also criticised the award used to pay the disabled workers as a “loophole through which disabled people in certain settings can be paid less than every Australian”.

“People can be paid between 80 cents and $2 an hour,” he said.

“It is a shocking rate of pay and it should not be something that exists in modern day Australia.”

Reports say Activ has repaid $12.7 million to 1,313 workers, including interest and superannuation.

The company has been ordered to repay the remaining money in the next 90 days, but CEO Danielle Newport said that could be a struggle.

“The challenge for us is people who no longer work with us,’ she said.

“Everybody who currently works with us has received their back pay, and many people who formerly worked for us.

“But we still need to find those 300-plus people who worked for us historically so that we can repay the money because the contact details we have are no longer current.”

The enforceable undertaking commits Activ to three external audits over the next three years, and it must also create a clear process for workers or their representatives to dispute their rate of pay.