Australia’s richest company has been fined $36,000 after pleading guilty to not paying long service entitlements to staff.
The Commonwealth Bank is one of the largest private employers in the nation and produced a $9.5-billion profit last year.
But on Monday it faced the humbling experience of appearing in the Melbourne Magistrates' Court alongside shoplifters and drunk drivers after a successful case brought by the Victorian government’s wage inspector.
The pleas for mitigation were in many ways similar: contrition, remorse and no priors.
Magistrate says there was 'no appropriate excuse'
A state government agency that chases up wage theft, Wage Inspectorate Victoria, alleged in 2022 that BankWest and CommSec broke the law by failing to pay more than $69,000 in long service leave entitlements to 23 former employees.
In Monday's court hearing that was reduced to 17.
For the individuals, the amount ranged from $500 to more than $10,000. Most were over $1,000.
In front of Magistrate Kathryn Fawcett, the bank's lawyers entered guilty pleas for the criminal charges.
The bank has spent more than $1 million to fix the problem and agreed to pay $12,000 for the legal costs of the wage agency.
"Inadvertence or system failures are not to be [given as] an answer to an inability to pay employee entitlements," Magistrate Fawcett said in sentencing.
"While there is complexity in long service leave provisions across state and federal [laws], that explanation provides no appropriate excuse."
The magistrate said no conviction would be recorded because the Commonwealth Bank has no prior convictions for breaching long service laws in Victoria.
She imposed fines of $18,000 on both entities, which was well below the $1.2 million imposed on Woolworths for similar offences that affected a much larger group of employees.
The magistrate said the bank's early guilty plea avoided what would have been a larger "aggregate fine of $40,000" for each entity.
Investigation finds hundreds of staff underpaid entitlements
During the investigation it was found the Commonwealth Bank companies underpaid 529 current and former staff $1.673 million in long service leave entitlements.
But it's only an offence under law if they're an ex-employee, when someone isn't paid their entitlement when their employment ends.
In a statement, a CBA spokesperson said the bank has "cooperated with the [Wage Inspectorate Victoria's] investigation".
"These issues should never have happened, and we again apologise to our people who were impacted by these past errors," it said
"We have remediated approximately $60,000 in underpayments, plus interest, to the 17 former employees who are the subject of the proceedings.
"We have invested substantial resources in improving our systems and processes to address the risk of underpayment of employee entitlements."
The underpayments to people who were still employed by Commonwealth Bank had to be rectified, but are not counted as an offence under the act.
The law in question is section 9(2) of Victoria's Long Service Leave Act 2018 and the maximum penalty for each offence is 60 penalty units ($10,904) for each day during which the offence continues.
The agency has been successful in similar cases involving long service leave entitlements against Woolworths, Coles and Optus.
It might not sound like a lot of money, or many staff, compared to the almost 50,000 the bank employs. But in most cases brought in this way — and in this one specifically — the companies involved have subsequently done audits of all staff potentially affected by the law-breaking and compensated those whose wages were stolen.
Complex problem
Stephen Clibborn from the University of Sydney's Business School has been investigating the field of wage theft for the past decade.
"My research with organisations like this and with others, tells me that many of them have not put in enough effort or allocated enough resources to ensure that they're compliant," Dr Clibborn said.
"It's not a good enough excuse. Our employment laws are complicated. But that on its own is not enough reason not to comply."
Beyond the fact that complying with the law is a base-level requirement, the argument about complexity misses what Dr Clibborn says is a key point: companies do extremely complex things all the time.
Qantas keeps a global fleet airborne while Woolworths and Coles manage thousands of lines of perishable products across an entire continent.
He gives another example: "It's accepted by many organisations that tax laws are complex, but they put in the effort to ensure that they comply, they pay for the advice that they need, and they have the systems in place," he said.
"That doesn't seem to have been the case with employment laws."
What will these fines mean for the bank?
The fines would hardly act as a deterrent to businesses where profit can top billions of dollars annually.
Coles was fined $50,000 in 2021 for what Magistrate Justin Foster described as a "systemic failure" to ensure employees received their full long service leave entitlements.
In May, services company Spotless was fined $12,000 and last month Optus was fined $13,000 and ordered to pay $15,000 in costs.
But an April judgement from Magistrate Nahrain Warda did get corporate Australia's attention, after supermarket giant Woolworths was fined $1.3 million for underpaying more than $1 million in long service leave to more than 1,000 employees.
Magistrate Warda called the situation a "systematic and widespread failure" by one of the nation's biggest employers.
"It is a gross failure on their part for not ensuring that such errors don't exist and any irregularities are stamped out early.
"It is expected that such a large corporation, that expands across all of Australia, would consequently have thorough payroll systems in place."
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