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."

Keith Towler has backed a decision to make the council answerable to a board under Welsh government control.
It follows a controversy after claims that children were locked in the rooms.
Mr Towler said he had already been given a "cast-iron guarantee" the rooms were now out of use.
Education Minister Leighton Andrews announced that the council must answer to the Pembrokeshire Ministerial Board after he said he had "little confidence" in certain senior council officers.
The issue of how Pembrokeshire safeguards some children has led to a major row with the Welsh government.
A complaint was made in June 2009 about children being locked in the room, which had no natural light or ventilation, at the pupil referral unit in Neyland.
Mr Towler told BBC Radio Wales that the "time-out" room at Neyland was "no longer being used nor any room like that".
"I've had an absolute cast-iron assurance that the room will never be used again.
"The door has been taken off and it's not being used.
"Families need to know that it's unacceptable and that the situation will never happen again in Pembrokeshire," he added.
He added that he had met Pembrokeshire council and he felt that "some progress" had already been made, but the intervention by the education minister was important.
"(Answering to the special board) is a necessary step by Leighton Andrews," said Mr Towler.
"The position I've taken is we've got to make sure all the procedures are as safe and as robust as they can possibly be for children and the Welsh government and the council working together will help to achieve that."
On the improvements he had seen Mr Towler said: "The council is working to make sure that everybody understands what listening to children really means in a safeguarding sense".
He added that "internal matters" resulting from when allegations of abuse were made had still to resolved, and he would not comment on those at the moment.
"It's clear the right things are happening and I've met with one of the families involved in the (pupil referral unit) in Neyland to try to get a feel of how local people are feeling."
Mr Towler said there would be no summer leave for people working to put things right at the council.
"Parents need to be reassured things are being done on the right level," he said.
Last September, ministers sent a panel of experts called the Pembrokeshire Ministerial Board into the council, after issuing the local authority with a final warning.
Mr Andrews said on Monday what the board and a range of inspectors have since told him "do little to allay our concerns".
Council leader Jamie Adams said the local authority was "making good progress" on the issue.
"We remain committed to doing everything that can reasonably be expected to keep children in Pembrokeshire safe."
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.
[NEXT_CONCEPT]
The children's commissioner for Wales says families need to know pupils will never again be put in padded "time-out" rooms after a row in Pembrokeshire.