Wage theft isn’t complex. Just ask the Commonwealth Bank

The Commonwealth Bank’s management might have been happy with its $5 billion profit announcement this week, but yesterday the Federal Court dished up an ugly footnote.

The bank copped a record $10.34 million fine for wage theft by CBA and Commsec, which underpaid staff by $16 million over a period of years.

Now, credit where due — the reason it was a record fine is because of changes to wage theft laws by the Turnbull government, which made it easier to prosecute and increase fines for “serious contraventions”. And these were “serious contraventions”.

The persisting line from big business is that wage theft is because of “award complexity” — if only we could strip away many of those conditions and protections for workers, wage underpayment would be heavily reduced among hard-pressed employers. It’s a particularly favoured line of the Business Council of Australia, of which the Commonwealth Bank is a member.

Was the Commonwealth Bank’s underpayment of 7,402 CBA and CommSec employees from 2015 to 2021 a case of award complexity? Not according to Federal Court Judge Robert Bromwich, who “found that senior staff at CBA and CommSec had been put on notice of potential non-compliance issues” and “knew facts that should have sounded a warning” but took years to address the non-compliance issues. He also found that “responsible HR managers had disregarded or been indifferent to the risk that individual flexibility arrangements [IFAs] were not meeting the employees’ entitlements”.

This is one of Australia’s biggest companies, with a huge HR department, operating in financial services; it was alerted to the underpayments and did nothing. According to Bromwich, CBA managers were “amply able to prevent anything of this nature occurring in the first place, let alone over such a substantial period of time … the obligations were readily able to be complied with, and proper checks to ensure that was taking place were not hard to implement. That did not happen”.

CBA managers also “breached workplace laws by misrepresenting to some workers that they were better off under the IFAs”, according to the Fair Work Ombudsman (FWO). So much for it all being too complex.

The only positive out of all of it is that the CBA self-reported to the FWO and cooperated with the ensuing investigation. And $10 million is pocket change to the bank, of course. But it’s one to bookmark for the next time the Business Council tries insisting it’s all the fault of the industrial relations system.