NAB facing FSU Federal Court action over huge underpayments claim

NAB and the Finance Sector Union are headed to the Federal Court over what could be the nation’s biggest staff underpayment issue.

NAB could be facing the biggest staff underpayment issue yet seen in Australia. Picture: Bianca De Marchi

National Australia Bank and the Finance Sector Union are headed to the Federal Court over what could be the nation’s biggest staff underpayment issue, possibly in the hundreds of millions of dollars.

FSU state secretary for Queensland Wendy Streets said the union had retained senior counsel and intended to lodge Federal Court proceedings.

A meeting with the FSU’s legal advisers will take place later this week to determine the best way to proceed.

“We had a member meeting six weeks ago and a resolution was passed to brief a barrister,” she said.

“There is case law which supports both sides but we believe we are right.”

The dispute between NAB and the FSU relates to alleged underpayment of full-time staff.

While the bank has already paid $55m in compensation to current and former staff, they were part-time employees.

Ms Streets said the number of full-time staff potentially affected was much greater.

If the Federal Court found in the union’s favour, she said the bank’s exposure could run to hundreds of millions of dollars.

Full-time staff at the group three and group four levels across the bank were paid in excess of $100,000 a year, and the bank’s position was that the extra hours in dispute above a 40-hour week amounted to “reasonable additional work” given the seniority of the affected people.

“But most of our members are working 50-60 hours a week, not 40,” Ms Streets said.

The biggest fully remediated case of so-called wage theft in the financial services industry concerned $57m in underpayments by Commonwealth Bank, which was settled in December 2019.

NAB has been conducting a payroll review – also since December 2019 – which led to a pre-tax provision of $128m in the second half of 2020.

The bank said at the time that the provision covered payments dating back to October 1, 2012, including compensation costs of $110m and a further $18m for the remediation program.

There was no provision, however, for full-time staff.

NAB said in a statement on Tuesday that the salaries of its full-time employees were based on modelling against the banking, finance and insurance award where relevant and market analysis for equivalent full-time roles.

“Hours of work are not used to formulate their strategy,” the bank said.

“NAB continues to engage openly on these issues with the Finance Sector Union and the Fair Work Ombudsman.”

Group executive people and culture Susan Ferrier said NAB had begun the next phase of remediation payments as part of its payroll review.

Remediation payments of around $40,395,473, including interest and superannuation, would be made to 7,773 current and former staff.

The payments related to issues concerning part-time remuneration, district allowances and meal allowances.

“The issues identified in the review are not acceptable and we apologise to all current and former colleagues impacted,” Ms Ferrier said.

“We are moving as quickly as possible to fix these issues and we want to make sure we get this right.”

Chief executive Ross McEwan said in a note to staff at the time the provision was made that the amount was an estimate for the annual result because the final impact could not be determined with certainty until the remediation program was completed.

The review, he said, was “comprehensive and complex” because the data required to be analysed to identify and fix the issues was substantial.

“The issues largely stem from a lack of appropriate investment, governance and oversight over time, resulting in a payroll system not fit for purpose,” Mr McEwan said.

“We are committed to pay any money owed as soon as practicable after we complete the investigation on an issue, and this will mean payments may be progressive for colleagues and former colleagues.”

While NAB was aiming to finalise the investigation on “a number of matters”, others were likely to continue into 2021.

Mr McEwan reiterated that the matters identified were not acceptable.

“This again demonstrates the importance of getting the basics right and the impact on people and our business when we don’t,” he said.