CBA fined $10.3m for wage theft

Courtesy of Australian Payroll Association

In a notable development for the finance industry, the Commonwealth Bank of Australia (CBA) has faced hefty fines for long-standing wage discrepancies involving thousands of its staff members. The Federal Court has penalized the bank due to admissions that senior managers had been aware since 2010 that workers were being underpaid, yet the bank failed to rectify the issue and misled staff about compliance with the law. This has been characterised as systematic conduct over a decade. The bank, along with its CommSec arm, has admitted to collectively underpaying 7,402 employees a total of $16.1 million from 2015 to 2021, all of which has been paid back with interest.

The bank’s reliance on individual flexibility arrangements (IFAs) has been identified as a key factor in the underpayments. These IFAs removed certain entitlements such as rostered days off and overtime pay, in return for higher pay and bonuses. However, the bank did not perform the necessary annual reconciliations to ensure that the IFAs resulted in staff being better off overall compared to the enterprise agreements, leading to significant shortfalls.

The Fair Work Ombudsman has taken on this case as one of its most significant underpayment cases, highlighting the systemic nature of the issue and pushing for substantial fines. Each breach could potentially attract fines of up to $660,000 under the Fair Work Act. The Ombudsman has stressed the responsibility of businesses to invest in their payroll systems, conduct audits, and ensure compliance as a core governance requirement.

Additionally, the bank is addressing a separate issue where it has agreed to backpay staff an estimated $3 million for failing to compensate for 10-minute tea breaks over a period of at least six years. The settlement includes payments to branch enterprise agreement employees and the introduction of a new system to record and compensate for untaken breaks.

The Finance Sector Union has been vocal in its criticism of the bank’s practices, emphasizing that such wage issues undermine the security of all workers in Australia and should be met with stringent legal consequences.

These developments underscore the importance of rigorous compliance with employment laws and the role of unions and regulatory bodies in safeguarding employees’ rights. As part of its response, CBA has acknowledged the underpayments and expressed a commitment to preventing future occurrences by strengthening its systems and processes, and by transitioning to modernised employment arrangements based on its 2020 enterprise agreement.

The cases and the bank’s response signify a crucial step towards rectifying past wrongs and setting a precedent for corporate responsibility in the Australian financial sector

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