About 100 home care workers in Swansea and Carmarthenshire are to be paid up to £2,500 each after a company breached minimum wage rules.
MiHomecare had not been paying employees to travel between clients, meaning their hourly rates of pay did not comply with the legal minimum.
Richie Lewis, of the Unison union, said the firm was "rectifying systemic errors" and valuing its staff.
MiHomecare said it had taken steps to ensure there were no future problems.
Unison said, typically, care providers do not pay their employees to travel between clients and Mr Lewis urged other companies to review pay procedures.
"Home carers work long hours under increasingly difficult conditions and it is often the case that they end up out of pocket in order to provide the level of care that their clients need," he added.
MiHomecare, which operates Village Home Care, employs 6,000 home care workers in England and Wales who look after 10,000 elderly, disabled and infirm people.
The company, said it had completed a comprehensive review of payments for all of its care workers "to be absolutely certain that they are treated fairly and that we comply with wage legislation".
"We have found some errors in calculating travel time pay and we have decided to make a one-off payment to all affected people," a spokeswoman said.
"Additionally we took steps in June 2015 to ensure that this should not be an issue in future by revising some pay rates and amending care rosters."