CBA admits underpaying staff by over $16 million: report

Bank could be fined $666,000 per breach

CBA admits underpaying staff by over $16 million: report

Employees of the Commonwealth Bank of Australia (CBA) are underpaid by over $16 million, according to the firm, as it admitted that it knowingly underpaid its staff through widespread use of individual flexibility arrangements (IFA).

The CBA has been accused by the Fair Work Ombudsman (FWO) of failing to pay $9.74 million to 5,014 employees, while its subsidiary Commonwealth Securities Limited (CommSec) failed to pay $6.36 million to 2,422 staff members.

The company has been accused of using its IFAs to omit various entitlements in enterprise agreements, such as rostered days off, pay increases, overtime pay, annual leave loading, and allowances in exchange for higher salary and bonuses.

A representative from the CBA confirmed to the Australian Financial Review that the bank made "certain admissions" in relation to FWO's legal action.

"We acknowledge that any instance of employees not being paid their correct entitlements is unacceptable," the representative told the AFR.

Statement of Agreed Facts and Admissions

The statement came after a Statement of Agreed Facts and Admissions has been filed by the FWO, CBA, and CommSec on March 10.

In the filing, the FWO is no longer alleging that CommSec misrepresented to some employees that they would be better off under their IFAs.

A report from the AFR also said that the March 10 filing saw that CBA admitting that it had a "better off overall test" (BOOT) clause that HR regarded as a "comfort clause" for Fair Work and the union.

The BOOT clause was supposed to ensure that individual arrangements were kept above Enterprise Bargaining Agreement rates, but the bank admitted that it would only apply it if a worker complained, the AFR reported.

HR staff were also aware of the bank underpayment risks but were "indifferent," according to the AFR report, citing the filing.

CBA also admitted that it knowingly underpaid staff from at least September 2017 and agreed that its conduct was part of a "systematic pattern of conduct over approximately 10 years," the AFR reported.

In the filing, the FWO doubled down on its allegation that CBA and CommSec knowingly failed to comply with some of their "better of overall obligations" under their enterprise agreements.

"The breaches meet the 'serious contraventions' threshold inserted by the 2017 amendments to the Fair Work Act, because of the systematic nature of the alleged conduct," the FWO said in a media release.

Due to the alleged breaches meeting the serious contravention threshold, the CBA could be fined $666,000 per violation if found guilty.

Wage theft in Australia

The admission from CBA indicates that Australia's biggest bank has "conceded that it has knowingly participated in wage theft," according to Finance Sector Union national secretary Julia Angrisano, as reported by the AFR.

CBA's case has been reported as one of Australia's major underpayment cases, along with Coles Supermarkets and Woolworths.

The report also came as the Reserve Bank of Australia recently apologised to staff for underpaying them.

Australia is eyeing higher penalties of up to $4 million for cases of serious wage theft, as proposed in its second tranche of workplace reforms.

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