Westpac has announced that it has underpaid 8,000 staff by $8 million.
The major bank today admitted that an internal review unearthed a calculation error that saw long service leave entitlements wrongly calculated, which led to both underpayments and overpayments.
Westpac’s payroll system failed to pick up changes in people’s working arrangements that affected their long service leave, such as when a worker moved from full-time to part-time work.
“We apologise to anyone impacted by these errors and our priority is to make payments as soon as possible,” said Westpac group executive for enterprise services Alastair Welsh.
“For long service leave entitlements, different rules apply to different employees based on their employment history and work arrangements. Regrettably, our system didn’t correctly capture the right methodology every time.
“We are putting in place measures to ensure employee long service leave is correctly calculated.”
Employees who were overpaid as a result of this error will not be asked to repay the sum.
The bank has said it will soon start to contact current and former workers who were found to have been underpaid their long service leave entitlements to remediate them.
Westpac haunted by AUSTRAC allegations
Westpac has been in the spotlight for months after the financial crime watchdog AUSTRAC found the major bank made 23 million breaches of money-laundering laws, including failing to carry out due diligence on transactions that had links to child exploitation.
On 12 June, AUSTRAC revealed it was likely to add additional allegations of wrongdoing against the Big Four bank.
At the beginning of the year, Westpac chairman John McFarlane said he was “surprised” the major bank had been discovered for its 23 million breaches.
“I was a little surprised actually that Westpac and the other banks did get caught on these matters because these are matters that have come up elsewhere in the world,” he said.
“But you know, these things happen.”
Australia plagued by underpayment scandals
However, Westpac is far from the first major employer to have been caught underpaying staff.
A few weeks ago, major bank rival NAB said it had uncovered underpayments to 1,500 employees.
In late February, Woolworths – who estimated it had short-changed staff between $200 to $300 million – revised the figure to $315 million.
“The calculations of the salary shortfall involve a substantial volume of data, high degree of complexity, interpretations, estimations, and are subject to further analysis of prior periods and the Fair Work Ombudsman's ongoing investigation,” the company said in its half-yearly results.
Other major organisations caught underpaying staff include national broadcaster ABC, Qantas, the Commonwealth Bank of Australia, Bunnings, Shangri-La Sydney and global jewellery chain Michael Hill as well as the umbrella group of Rebel Sport and Supercheap Auto.
Last year’s biggest underpayment scandal involved former Masterchef judge George Calombaris, who was fined $200,000 for underpaying workers $7.83 million.
Data from payroll provider Ascender found that more than 1 in 4 Aussies are being paid incorrectly (28 per cent), and two in 10 Aussies are being underpaid (22 per cent).
Late last year, head of the Association of Payroll Specialists Jason Low said the underpayments were stemming from lack of resourcing of the payroll department.
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