IAG Back-pays Workers $37 Million

Courtesy of Australian Payroll Association

The Fair Work Ombudsman (FWO) says Insurance Australia Group (IAG) has back-paid more than 19,000 workers $21 million owed under federal workplace laws. A further $16 million was back-paid for long service leave entitlements.

An FWO media release said the underpayments were caused by “basic shortcomings in the IAG entities’ processes, including not having time and attendance systems in place.”

The release said the giant insurer, under brands including NRMA Insurance, RACV, CGU, SGIO, Swann Insurance, WFI and ROLLiN, self-reported non-compliance issues to the regulator in December 2020.

The underpaid workers were located in every state and territory. Most payments, said the release, amounted to about $1,000 but 14 workers received more than $200,000.

However, the Fair Work Ombudsman Anna Booth complimented IAG.

“IAG responded strongly and invested heavily to fix those problems, including through new measures to ensure all its workers are paid correctly in future,” she said. “IAG have made the most significant commitment for Board oversight we’ve seen in any EU entered into with the FWO to date.”

IAG has also signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman.

The Ombudsman’s release said the payments errors resulted in employees’ “basic lawful minimum entitlements being undercut and employees being left worse off for many years.”

Employees were underpaid overtime, weekend, public holiday and shift-work entitlements, as well as minimum wages, leave entitlements and other allowances and entitlements.

In its own media release, IAG confirmed entering into an EU with the Ombudsman and the steps it is taking to help stop the mistakes happening again.

“A key cause of these issues was IAG’s payroll system which required employees to submit their claims for entitlements manually,” said the release.

IAG said it focused on remediating impacted employees as quickly as possible. Payments, including interest, said the release, were made to impacted current and former employees in 2022 and 2023.

“IAG has apologised to the current and former employees who were impacted by these errors,” said the release.

/Public Release. View in full here.