Hospitality giant Merivale has agreed to an $18 million settlement in a class action lawsuit over employee underpayment claims. 

Merivale, a major figure in the hospitality sector, was accused of underpaying around 14,000 staff by $129 million, by adhering to an outdated WorkChoices agreement. 

The settlement, still pending court approval, is notable not just for its magnitude but also for its allocation: nearly half is designated for legal fees and litigation funders, leaving about $9.4 million for the affected employees.

A Merivale spokesperson has noted that the settlement was reached without admission of wrongdoing. 

“Merivale strongly denies these allegations and continues to do so,” she said, highlighting the intent to terminate protracted litigation and avoid further costs.

A class action, initiated by Adero Law in December 2019, highlighted a pivotal Federal Court decision against Merivale's reliance on a 2007 agreement for employee payments. 

Justice Thomas Thawley's 2021 ruling invalidated the agreement, noting it failed the requisite fairness test and was improperly ratified.

This case brings to the forefront the delicate balance between legal authority reliance and ensuring fair employee compensation. 

Merivale's settlement aims to rectify the alleged underpayment caused by an “erroneous decision of the Workplace Authority”, according to a joint statement by the involved parties.