Fair Work Ombudsman Sandra Parker
Commonwealth Bank of Australia has begun notifying staff that its controversial “individual flexibility arrangements” do not comply with Australian fair work laws and that it has embarked on a process to overhaul the contractual work arrangements of thousands of employees.
The bank has been forced to address compliance flaws in individual arrangements (IAs) after it was sued in the Federal Court last October by the Fair Work Ombudsman for underpaying more than A$16 million to 7,425 workers.
The Ombudsman alleges that staff on IAs were paid less than their lawful entitlements over a five-year period starting in October 2015.
The FWO alleges that CBA “knowingly” failed to meet a legal obligation to guarantee that staff working under IFAs were better off overall than if they were paid under enterprise agreements.
The Ombudsman alleges that CBA did not conduct regular audits to make sure the pay of workers on individual contracts stayed above entitlements contained in the company’s enterprise agreement.
In a memo issued to staff on individual contracts in the last week, the bank acknowledges that its contracts do not comply with fair work laws and that it has established a 12-month program “ to improve the transparency and consistency” of the employment arrangements.
“By offering new arrangements to our people on an IA contract, we are also addressing the issues raised by the Fair Work Ombudsman about IAs in the proceedings commenced against the Group in late 2021,” the bank tells employees in the memo.
“Although the proceedings are ongoing, we acknowledge that some of the ways we historically entered into and administered IAs did not comply with requirements in the Fair Work Act.
“As an employee currently employed on an IA, we want to reassure you that your employment remains effective and these issues do not affect your employment status, pay or entitlements with the Group.”
The bank also reveals in the memo that a contract simplification program would be rolled out in phases over the next 12 months.
“This means our people on an IA contract will receive the offer of a new employment contract at different times,” the bank says in the memo.
“You will be offered a new contract on terms and conditions that are no less favourable overall than your current terms and conditions.”
The first phase of the rollout is expected to commence this month.
Jason Hill, the Finance Sector Union’s secretary for South Australia and the NT, said the bank needed to ensure it gave staff a choice of opting out of individual agreements as part of the remedial process.
“The FSU has been calling on CBA to stop its practice of automatically putting new staff on contracts for some time,” he said.
“Finally due to the pressure of potentially being forced to do something about it as this practice has been found to be unlawful they are now trying to fix their problem.
“FSU welcomes the ceasing of this practice, however due to the widespread use of these bogus individual agreements CBA also have to get the process right to move those staff back onto the enterprise agreement if they so choose.”
The Fair Work Ombudsman Sandra Parker last year indicated that CBA’s pay compliance issues might constitute another breakdown in governance at the bank.
“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,” Parker said last October.
“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.”