In an embarrassing admission, ME Bank yesterday confirmed that it underpaid staff A$1.5 million in superannuation entitlements for more than a decade.
The bank, which is owned by industry super funds, last week notified 2144 current and former employees about the underpayments that were caused by a software programming error within its payroll system.
The longstanding "pay code error" meant the bank failed to pay superannuation owed to staff on holiday and overtime entitlements for twelve years.
An ME spokesman confirmed details of the pay blunder after former employees of the bank tipped off Banking Day.
"The cause was pay codes not being set up correctly in ME's payroll system, which has been fixed, and 708 current employees and 1,436 former employees were underpaid a total of $1.49 million in super over twelve years," the spokesman said.
"Affected employees have been notified and a full disclosure has been made to the Australian Tax Office."
In letters sent to former staff the bank has promised to remit the unpaid superannuation contributions to the ATO along with additional compound interest payments of 10 per cent for each year the debt was outstanding.
This means that staff who had an unpaid super liability of $200 in 2007 are in line to receive a $628 contribution to their super account.
The remediation is expected to cost ME around $2.5 million.
After the discovery of the pay code error in May, the bank appointed consultants from Ernst & Young to conduct an historical audit to establish the level of underpayment.
"ME has apologised unreservedly to those affected and undertaken to fully reimburse all affected employees, including with interest," the spokesman said.
"The reimbursement with interest, will be made to affected employees via the ATO by March 2020."
The banking sector is coming under heightened scrutiny to come clean on the sensitive issue of wage theft following admissions from Commonwealth Bank earlier this year that it had underpaid at least 8000 staff millions of dollars.
However, CBA dropped a bombshell last week when it reported the findings of deep-dive audits that showed it had short-changed more than 41,000 current and former employees $53 million since 2010.
Macquarie is also in the line of fire of former employees who are suing the bank for alleged failures to pay minimum base pay and leave entitlements. Former employees have launched seven separate court actions in the last three years alleging underpayment by the investment bank.
The Finance Sector Union is campaigning for banks and other financial services providers to undertake fresh audits of their pay systems to ensure their historical pay practices have been compliant.
FSU national secretary Julia Angrisano said her union had engaged with ME in recent months to finalise the remediation arrangements for bank staff.
"Across the finance sector, workers are concerned about whether or not they are receiving the correct level of pay and entitlements," she said.
"We urge all employers to undertake the appropriate reviews and checks so that workers can be certain that they are receiving their correct entitlements."