Westpac in $8m staff underpayment blunder

Westpac is the latest big bank to botch payroll, failing to correctly calculate long service leave entitlements for 8000 employees.

Westpac says it has got pay calculations for around 8000 staff wrong. Picture: David Geraghty

Westpac has become the latest major bank to botch staff pay and find itself facing an underpayment scandal, after admitting it failed to correctly calculate long service leave entitlements for some 8000 employees.

National Australia Bank last month said it had underpaid about 1500 employees to the tune of $1.5m, while in 2019 Commonwealth Bank outlined it would have to repay more than 41,000 staff about $53m, including interest.

Westpac blamed “calculation errors” for the issue — which caused underpayment and overpayment of entitlements — and said it would be paying back about $8m to employees, including interest. The bank will not ask those that were overpaid to return the money, it said in a statement on Friday.

It’s another blunder for Westpac, which is currently entangled in a legal case brought by the financial crimes regulator Austrac over more than 23 million alleged breaches of the law. The breaches were linked to the inadequate implementation of technology systems and lack of oversight largely in Westpac’s institutional bank.

The leave calculation problems for current and former bank staff revealed on Friday were identified as part of a review of Westpac’s payroll and long service leave arrangements.

“We apologise to anyone impacted by these errors and our priority is to make payments as soon as possible,” said Alastair Welsh, Westpac’s group executive of enterprise services.

“For long service leave entitlements, different rules apply to different employees based on their employment history and work arrangements. Regrettably, our system didn’t correctly capture the right methodology every time.

“We are putting in place measures to ensure employee long service leave is correctly calculated.”

A spate of other large companies have also endured staff underpayment issues. They include Woolworths, Bunnings, Michael Hill and 7 Eleven, which last year confronted staff wage underpayment scandals, some which stretched for as long as a decade.

Woolworths’ underpayments included workers at Big W, Dan Murphy’s and BWS, as well as at its supermarket businesses. The controversy led Woolworths’ chief executive Brad Banducci to give up his short-term bonus.

Last month, the supermarket giant was further embarrassed when it had to add to the total cost of the wage scandal, bringing it to $390m.

Westpac’s Friday statement said in some instances, the wrong rules were “inadvertently applied in the payroll system” which affected long service leave entitlements.

“We are committed to putting things right for our people and preventing the issue from re- occurring, and we will continue to check our processes to ensure employees receive their correct entitlements,” Mr Welsh said.

The bank gave an example saying if an employee had a change in their hours worked over a period of time, its payroll system had not always recognised that.

CBA reported its own staff underpayment issues to the Fair Work Ombudsman in early 2019, with chief executive Matt Comyn in a statement in December labelling the errors unacceptable and saying they “should never have happened”.

CBA started a review of employee pay in 2018 and subsequently made a provision for 2017-18, linked to the underpayments, while a “range of consequences” were applied to provide accountability for the errors.

Separately, the Finance Sector Union of Australia has called upon members at NAB to take part in an “urgent audit” of their pay to determine the extent of the bank’s failure to properly remunerate staff.

At the time, the FSU said up to 1500 NAB staff were “systematically underpaid” in a process going back more than a decade.

Westpac shares closed down 0.4 per cent on Friday, at $18.54.