A Robber is Running the Bank, and the Sheriff of Nottingham says it’s not Robin Hood!

Wage theft is a hot topic, because generally speaking, it’s not as if the poor are robbing the rich to give back to the poor.

With news just in, CBA and CommSec have suffered a record $10 million penalty for breaches of the Fair Work Act. They committed “serious contraventions”’ – knowingly and systematically – that attract a tenfold increase in the maximum penalties.

The Federal Court found that CBA and CommSec did not have adequate checks and safeguards for pay made to staff on Enterprise Agreements and Individual Flexibility Arrangements (IFAs). They did not have the required system of regular reconciliations and top up payments to ensure that staff were paid their minimum entitlements.

Individual Flexibility Arrangements (IFAs)

Employers, particularly where there is a high demand for staff worth the extra money, often pay an “all-in” above Award hourly rate or annual salary plus benefits intended to satisfy minimum Award entitlements.  Employers can do so legally if they make Individual Flexibility Arrangements (IFAs) with staff where the employee meets a better off overall test (BOOT) with the all-in salary.

However, sometimes the employee can work longer hours or different shifts that push the worker, per the Award, over the all in salary plus benefits agreed in the IFA.  This means the employee is underpaid.  Employers should ensure that they have a system to repeat the BOOT when the risk of non-compliance is high, such as when an employee starts working more than the amount of overtime built into the all-in hourly rate or salary, or where the employee’s job changes pushing the job classification to a higher hourly rate.

Employers should have systems to repeat the BOOT when triggered by realist set points such as where an employee regularly works more than a set number of hours per pay period, and to also do a periodic BOOT on all or a good sample of employees periodically, if not quarterly, at least annually.

This decision is a big warning to employers, especially large well resourced employers, to consistently apply the BOOT initially done when the employees first agreed to an IFA.

Here is the decision: Fair Work Ombudsman v Commonwealth Bank of Australia [2024] FCA 81

With all the hard work involved in funding a business with good staff, it isn’t worth it to get the tag of “wage robber” from the Fair Work Sherriff when some simple steps could pick up problems and fix them before they get out of hand.

 What should you do?

Employers should contact Peter McNamara for advice about their employee contracts and whether they are at risk of claims for back pay and penalties for wage theft.