The University of Melbourne will back pay $22 million to about 15,000 current and former casual staff after many were incorrectly paid for minimum engagements or weekend work.
It works out to an average of $1476 per worker, including interest and superannuation.
Impacted workers were employed under 2013 and 2018 enterprise agreements, with about 60 per cent of cases involving the incorrect payment during casual minimum engagements.
Almost 30 per cent of cases related to pay for weekend or public holiday overtime, with the discrepancies picked up during a Deloitte review of more than 3.2 million payslips.
Vice-Chancellor Professor Duncan Maskell said the university was determined to resolve the issue.
"We apologise to any past or present employees who have not been paid correctly for work they performed," Prof Maskell said in a statement.
"We remain committed to strengthening the University's governance structures, systems and processes and this continues to be an area of focus for our institution."
Over the past year the university introduced new processes including centralising its human resources department, providing extra training to staff and plans to implement a new payroll system.
The university will contact affected casuals and pay them in coming months.
Anyone who was overpaid will not be asked to repay the money.
National Tertiary Education Union Victorian acting secretary Sarah Roberts welcomed the announcement but called for 80 per cent of workers to be employed on an ongoing basis.
"Insecure work is at the heart of this wage theft scandal and until we see universities take concrete action this will keep happening," Ms Roberts said in a statement.
"The vice-chancellor's apology would mean a whole lot more if it had a concrete commitment to more secure jobs."
The union is pushing for an inquiry into the governance of Australian universities.
