IBM backpays $12 million to 1600 staff

IBM Australia has paid back more than $12 million in unpaid wages to some 1600 of its staff between 2012 to 2020.

The services behemoth and subsidiary IBM Global Financing Australia agreed to enter into an enforceable undertaking (EU) with the Fair Work Ombudsman, after self-reporting last year for failing to apply the relevant awards.

The employees, who were working across the country, were covered by Business Equipment Award 2010, the Professional Employees Award 2010, the Banking, Finance and Insurance Industry Award 2010 and the Nurses Award 2010.

Fair Work said IBM failed to apply the award to most of its employees as they were salaried professionals “earning significantly above minimum” award wage rates. This caused issues relating to vehicle allowances, superannuation entitlements and annual leave loading.

IBM was also found to have paid “a significant number” of casual staff at its Ballarat contact centre were paid the national minimum wage, instead of the higher rates and entitlements in the applicable award.

As of 1 February 2020, IBM identified and backpaid 1647 workers a total of $12.3 million, including interest, for the underpayments. Individual back-payments ranged from less than $1 to $145,000, with both casual staff and full-timers with a company car.

Fair Work said there are more underpayments that are expected to be “significant in size” still being quantified, and IBM is required to pay all affected staff by 16 October 2020.

Fair Work Ombudsman Sandra Parker said that an EU was appropriate as IBM had cooperated with the investigation and demonstrated a strong commitment to rectifying all underpayments.

“Under the Enforceable Undertaking, IBM has committed to stringent measures to comply with the law and protect its workforce. This includes engaging, at its own cost, an expert auditing firm to conduct an independent assessment of the outcomes of its rectification program and to audit its compliance with workplace laws over the next two to three years,” Parker said.

“This matter serves as a warning to all employers that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale.”

The EU also requires that IBM pay contrition payments to the government’s Consolidated Revenue Fund by 27 November 2020, which is equal to 5.25 percent of the underpayments.

A third-party expert will also conduct its own review of the underpayments identified by IBM, which is due to be completed next year, and report the results directly to the FWO. Any further underpayments identified by the expert will attract a higher contrition payment of 7 percent.

IBM is also required to fund an independent organisation to operate a hotline to assist its employees for the next 12 months. The company will also display public, workplace and online notices detailing its workplace law breaches, as well as a formal apology to the workers.