THE Fair Work Ombudsman (FWO) has commenced proceedings in the Federal Court against Commonwealth Bank of Australia (CBA) and Commonwealth Securities Limited (CommSec) for alleged contraventions of the Fair Work Act for failing to pay 7,425 workers $16.44 million.

Australia’s largest bank disclosed to the Fair Work Ombudsman and the Australian Securities Exchange in 2019 that it was completing a company-wide review of compliance with its enterprise agreements since 2010 and identified contraventions.

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Impacted staff performed various roles nationally, but most were in customer service roles.

Following an investigation, the FWO is alleging that CBA and CommSec breached clauses of its enterprise agreements that required both companies to ensure that staff paid under these agreements and Individual Flexibility Arrangements (IFAs) were better off overall.

The FWO alleges that CBA and CommSec failed to undertake reconciliations to ensure that employees were not paid less overall compared to the applicable industrial instruments, and make top-up payments for any shortfall.

This led to staff being paid less than their lawful entitlements between October 2015 and December 2020.

Fair Work Ombudsman Sandra Parker said improving compliance in large corporates was a priority.

“We allege that CBA and CommSec failed to meet their lawful obligations to ensure employees were better off overall, which led to thousands of CBA and CommSec employees across the country being financially disadvantaged year after year,” Ms Parker said.

“Businesses have a responsibility to their employees, customers and the Australian community to get it right by prioritising workplace law compliance, investing in their payroll systems and conducting audits.

“Boards should treat the lawful payment of their employees as a core governance requirement.”

The regulator also alleges that, for staff paid under IFAs, the companies failed to ensure that workers were better off overall than if they were paid under the enterprise agreements between October 2015 to June 2020.

The regulator further alleges that CBA and CommSec also applied invalid IFAs to some staff, leading to a failure to pay various entitlements, including minimum rates, overtime, weekend and public holiday penalty rates and some allowances.

The FWO alleges that altogether, the contraventions resulted in a failure to pay 7,425 current and former employees a total of $16.44 million between October 2015 and December 2020.

It is alleged that CBA failed to pay $10.05 million to 4,999 employees, and CommSec failed to pay $6.39 million to 2,426 employees, with some of these workers performing work for both the entities during the period.

The majority of the workers have already been back-paid.

It is alleged that CBA and CommSec knowingly failed to comply with these ‘better off overall obligations’ under their enterprise agreements and that these breaches meet the ‘serious contraventions’ threshold inserted by the 2017 Protecting Vulnerable Workers amendments to the Fair Work Act, because of the systematic nature of the alleged conduct.

The FWO also alleges that between June 2018 and August 2019, CBA and CommSec misrepresented to some employees that they would each be better off overall under their IFAs and that those agreements satisfied their entitlements, in breach of the Fair Work Act.

The FWO is seeking orders for penalties against CBA and CommSec.

For the alleged serious contraventions, the maximum penalties for each company is up to $666,000 per breach. For all other contraventions, the companies face penalties of up to $66,600 per breach.

A directions hearing in the Federal Court in Sydney is still to be scheduled.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance about their rights and obligations in the workplace.