The Australian Catholic University (ACU) has underpaid about 1100 staff $3.6 million since 2016, the university revealed on Wednesday.
ACU, which has a campus in Watson, said it would pay back owed money, including interest, as soon as possible.
It said the error was discovered following an extensive audit.
Most unpaid academics were casual, sessional staff with PhD qualifications.
The issue was caused by errors in calculating entitlements, the university said.
University management had shown contrition and was committed to taking responsibility, National Tertiary Education Union (NTEU) ACU branch president Dr Leah Kaufmann said.
"Unlike some other universities, ACU management has reported itself, apologised, committed to full back payments within 28 days, and will be providing access to support for staff identified as the victims of underpayment," she said.
"The NTEU also welcomes ACU's commitment to pay every sessional employee at the highest rate until they can't be confident in their payment systems ensuring staff are paid at the appropriate rate.
"This should be a lesson to all universities."
More than 101,730 Australian university staff been underpaid $170.3 million in recent years, the union claimed.
It said ACU was aware of an issue as early as 2022.
"We are disappointed that the NTEU was not consulted before today, given ACU became aware there was an issue in late 2022," Dr Kaufmann said.
ACU said it has apologised to former and current staff impacted.
"The university has disclosed this matter to the Fair Work Ombudsman and has advised the National Tertiary Education Union and Community and Public Sector Union, as the unions' party to the ACU Staff Enterprise Agreement," it said in a statement.
"It has also notified the Tertiary Education Quality and Standards Agency, the Australian Taxation Office and UniSuper."
ACU vice-chancellor Professor Zlatko Skrbis emailed staff on Wednesday.
"You deserve to be paid correctly for your work and it is our responsibility to ensure you are being paid correctly, " he said.
"On behalf of the university, I would like to sincerely and unequivocally apologise on behalf of the university and the Senate to every employee - past and present.
"ACU is committed to wage integrity, in accordance not only with our legal obligations but also with our dedication to upholding the principles of Catholic Social Teaching.
"Our mission as a Catholic university commits us to treat every human person with dignity and respect."
