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.
And after many years we are still waiting for the Business Council, or any employers, to give a credible explanation for why the mistakes they make when interpreting these allegedly complex wage agreements only ever result in underpayments. It’s really mysterious.
Yes, funny how any overpayments to staff are very swiftly noticed and rectified by large employers
Some large employers don’t discover their small overpayments of staff for years, but when they do they take it back in a lump sum. The employee gets no warning and their pay is short or non-existent so they can’t pay their bills as expected. The ADF has done this on several occasions over the years, leaving us in a position where we couldn’t pay the rent because of their error.
I’m shocked.Shocked,do you hear.Have some companies actually overpaid some of their
employees?
Cost of doing business. And can we just call out the BCA for what it is – a union representing large Australian enterprises.
How the hell did we become a nation of employer wage thieves? Oh, and Super thieves. Prior to 2022, we had the LNP in power for 20 of the last 26 years, 77% of the time. It seems employers were emboldened during the Abbott/Turnbull/Morrison govts.
Meek, under-resourced regulatory bodies, govt pvte tenders, grants for mates, spending rorts and Robodebt all flavoured the rotten ethics of the time. The nation rotted from the head down.
It’s easy for a Current affairs journalist to hound a welfare cheat. Not so easy to door knock a gated mansion with security.
Easy, and on the agenda. Not so easy, and off the table.
Filth like ACA performs the same function as filth like the Herald Sun – indoctrination.
Journalists at ACA really.
And of course the Business Council is right! If only businesses did not have to pay their
slavesworkers at all; so much bother would be avoided, nobody would ever be underpaid again (which would surely make everybody very happy), and so many more jobs would be created, and there would be so much more prosperity! Presumably.Not slaves, SSR. Then they’d have to house and feed us. No, the ideal is independent, self-employed contractors a la Uber and co.
Australian corporations can do what the American do to facilitate modern day slavery. Privately run prisons. Get paid by the government to house and feed your workforce. That’s what prohibition is for. Even better when it’s racially skewed. That is if your a descendant of a family that built it’s wealth on slavery.
Plus a UBI for all the people whose labour is required but not scarce enough to pay a living wage.
“ And $10 million is pocket change to the bank, of course.“
Yep, and it’s a fraction of the $16 million they stole in the first place. What a joke. A fine equivalent to every cent of profit made for every year between 2015 to 2021 might have dissuaded CBA from pulling this again, but $10 million certainly will not.
Fines just don’t work unless they are massive.
$10mil compared to $5bil annual profit?
It’s 1/500th.
I reckon they should make all the execs and HR staff who were complicit do community service, as well as making the fine hurt a bit.
The fine would have to be in the hundreds of million$ to sting
In Norway traffic fines are a proportion on one’s income – Sweden toyed with the idea but capped it with a “..not greater than..” clause.
If corporations, which always claim that there duty is to shareholders, were thus fined pro-rata then the shareholders would be hit and might consider taking their investments elsewhere.
This would be a double benefit, a meaningful penalty for miscreant companies and their beneficiaries and cool off what is a ludicrously overheated stock market, due to share values artificially juiced by benefits without responsibilities.
The prerogative of the meretricious throughout the ages.
Fines for natural persons are a separate issue. Setting guidance that fines should be proportional to income is a good idea up to a point, but still ignores wealth.
It is entirely possible to have unlimited fines. When the penalty for an offence is set as “a fine”, with nothing more said to set a limit, that means the court can impose any amount at all.
The fundamental fault with fining bodies corporate is that it punishes a great many people who have little or no connection with committing the offence, while those who are really guilty escape relatively unscathed. It’s big mistake to think of bodies corporate as sentient beings in their own right who can be held responsible for their crim—al intentions and actions. The crim—als are the natural persons who made the relevant decisions and they are the ones who should be punished.
Being shareholders means they are complicit in the firm’s transgression, just as they profit from same.
That’s a nice theory, but in practice shareholders have almost no control and no access to any detailed knowledge of what the board is doing. There are exceptions, where a single shareholder owns so much of the company that the shareholder can dictate terms, demand seats on the board and so on, but most shareholders are pretty much helpless to influence in any detail what happens. Saying ‘they are complicit in the firm’s transgression, just as they profit from same’ is about as accurate as saying all the employees are complicit in the firm’s transgression, just as they profit from same. So why not blame the till monkeys and shelf stackers at Coles for that company’s price gouging?
Correct, fine the individuals and the board. Perhaps hot branding in the forehead as well? Not sure if I’m joking.
Exactly. A humble employee (eg bus driver) who inadvertently does the wrong thing (eg kill someone) will be held personally responsible and charged. An executive who knowingly and willfully does the wrong thing is never held personally responsible and never charged. And remind me again which one of the two is being paid mega-bucks for the ‘responsibility’ of their position.
Fines for corporate crimes are fundamentally wrong. They are usually trivial, and therefore have little or no effect. This is probably a better outcome, usually, than fines that are big enough to seriously damage the business. If the business is seriously damaged or made to fail, the ones who suffer most are ordinary employees who usually have little or no responsibility for the offences, and if the business has shareholders they lose too, although again they often have little direct control or even knowledge of what exactly the board and senior managers are doing. The company’s customers can also be seriously hurt, for example if the business was a property developer that was holding their deposits before it was sent bankrupt by a huge fine. Those who are responsible – typically some or all the board and senior managers – are better placed than anyone else to weather the storm, or escape while the going’s good. Fines for businesses can be too much collective punishment of a population because of the actions of a few.
For civil litigation it is reasonable and appropriate to deal with the business as a body corporate. But for all crim—nal matters every possible effort should be made to prosecute only the natural persons whose decisions and actions make them responsible. Unfortunately a few hundred years of precedent and the influence of very powerful vested interests has to be overcome before we can reform our judicial system so that such prosecutions are really feasible. As things stand, it is understandable that very few such prosecutions are attempted; they are extremely difficult and costly to bring to court, and those few that get that far typically fail any way, because the courts will almost never accept that any individual in a company, no matter how high and important, has sufficient knowledge and control to be a ‘guiding mind’ for the crime.
A recent Private Eye article set out in depressing detail why even such an appalling case as the UK Post Office scandal — where the PO and its IT contractor Fujitsu has spent decades lying in court again and again to falsely convict and gaol innnocent PO branch managers on the basis of erroneous computer records, and lied to and threatened many more branch managers in order to extort many thousands of pounds from each of them, destroying families and driving some to kill themselves — will not see any senior PO or Fujitsu people prosecuted.
You have to wonder which is more difficult – smashing the legal fortress which protects the roughshod-riding Scum, or assembling an effective vigilante brigade.
Nothing targeted at the organisation will really work. Fines are written off and ultimately passed on the shareholders as losses and customers as higher costs. They might serve to get some of the decision makers moved on, but those people will simply find employment somewhere else in the giant circle-jerk that is Senior Management Life.
What needs to happen is those senior individuals need to be held personally liable – and ideally face mandatory gaol terms. That is the only way to properly incentivise them.
Perhaps another way might be by having corporate fines paid through confiscation of shareholder stock. Direct and tangible losses to shareholders might help properly focus their attention on ensuring responsible and transparent management.
Why mandatory gaol terms? Mandatory sentences are an abomination, in all circumstances. The only person in a position to pass an appropriate sentence on a convicted person is the judge who has heard the case. Mandatory sentences only exist so that witless politicians ands power-crazed ministers can boast about how tough they are. They usurp the prerogative of the court, trample on the proper separation of powers and guarantee regular injustice.
Because if you’re rich enough, a fine is just money.
Getting stuck in a cage for 6-12 months, OTOH, is a real consequence you can’t buy your way out of.
Sure. The judge can decide if it’s a month or a decade or somewhere in between.
In general, I agree. Much like the bloke above talking about branding foreheads, I may be being somewhat hyperbolic.
Perhaps the sentencing guidelines simply need to recommend a relatively low threshold for some for of incarceration.
That does not answer the question. Sending them to gaol we clearly agree on. My point is about mandatory sentences, which remove the judge’s discretion. If the judge gets to decide if it’s a month or a decade or something imbetween, it’s not a mandatory sentence.
I think you are trying to create an argument out of semantics.
My actual words were “mandatory gaol terms”.
By which I meant, since it was not clear enough, “sentences that must always include some amount of incarceration”.
No, the misunderstanding arises only because that’s your own peculiar interpretation of mandatory sentencing. Mine is in line with, for example, the Law Council of Australia.
But I actually wrote “mandatory gaol terms”. ::shrug:::
A gaol term is a sentence, at least on my planet.
I regret only that I do not have an eyeroll big enough, especially since you’ve already said “sending them to gaol we clearly agree on” and your pedantry is based entirely on (deliberately at this point, since I have clarified my intended meaning) misinterpreting “gaol term”.
You must be a real blast at parties.
ok, how you imagine you have any reason to complain or disagree when your use of “mandatory gaol terms” is taken as an example of mandatory sentencing is completely beyond my, and I suspect anybody else’s too, comprehension. But do tell me more about these parties where all the fun is derived from mangling the language, failing to say what you mean and then getting bitter and twisted that nobody understands you. How can I avoid attending one?
Individual so called managers should be in the firing line for penalties, it might then sharpen their focus instead of brown nosing for their next promotion.