Fair Work Ombudsman hits Commonwealth Bank with $10.3m fine over wage payment failures

The Commonwealth Bank has been slapped with a $10.3m fine after the Fair Work Ombudsman secured a win against the lender following the underpayment of thousands of staff.

The Commonwealth Bank has been slapped with a $10.3m fine after the Fair Work Ombudsman secured a win against the lender following the underpayment of thousands of staff for several years.

In a judgement in the Federal Court on Thursday, the bank was hit with the penalties after being found to have failed to make top up payments to 4292 staff over several years, under a wage deal that saw them trade away overtime penalties for higher wages.

Justice Robert Bromwich found although CBA told staff they would be better off under the deal it failed to take “adequate steps to ascertain, or have a reasonable basis to represent, that the employee would be better off overall”.

The court found the bank relied on a “comfort clause” in its work contracts that saw it fail to check staff were being paid properly, with underpayments continuing until 2021, despite warnings to senior management over the issue.

Justice Bromwich ordered the fine be split between CBA and its securities trading operation CommSec, with the banking arm fined $7.3m while CommSec was hit with a $3.03m penalty.

But the fine falls short of the Fair Work Ombudsman’s proposed $12.8m penalty, with Justice Bromwich taking into account CBA’s co-operation with the court action.

Justice Bromwich said CBA’s failure and misrepresentation to staff “remain a concern”.

“Other employers, and especially large employers in the financial services sector, must be made aware that it is simply not worth the candle to have inadequate compliance systems in place,” he said.

“The only way to achieve this is by way of still substantial penalties being imposed.”

Finance Sector Union national secretary Julia Angrisano said CBA had engaged in wage theft “and ignored our repeated attempts to have the matter resolved and the stolen funds returned”.

“The bank knew exactly what it was doing but refused to acknowledge that its employment practices amounted to wage theft until the Fair Work Ombudsman became involved,” she said.

“What we have now seen is the largest and most profitable bank in Australia forced to repay more than $16m in stolen wages plus interest to more than 7000 affected staff.”

Ms Angrisano said the CBA case “shows why it was important for federal parliament to pass new laws to make wage theft a criminal offence”.

“For Australia’s richest bank, fines alone were not enough of a deterrent to stop them from knowingly ripping off workers. Those responsible have avoided criminal responsibility this time so we’re calling on CBA boss Matt Comyn to take swift action internally, to hold them to account,” she said.

A CBA spokesman acknowledged the court ruling.

“These issues should never have happened and we again apologise to our people impacted by these past errors,” he said.

“CBA has remediated all of the underpayments, including interest and superannuation.”

He said CBA had invested “substantial resources” in its HR systems and processes “to address the risk of underpayment of employee entitlements”.

Fair Work Ombudsman Anna Booth said CBA “failed to put basic safeguards in place to ensure its approach to remunerating staff”.

“They were far too slow to take action once clear risks of non-compliance were brought to their attention,” Ms Booth said.

“It is extremely disappointing that companies with such extensively resourced internal human resources and legal functions could have such a poor approach to ensuring it paid its staff their basic lawful entitlements.”