Australian Banks pay out for incorrectly paying employees

  • 17 August 2020

ORX News story of the month: July 2020

Each month, we share a free operational risk loss event story from ORX News. The story is handpicked by the team as one of the most interesting stories reported by the service in the previous month. This story was published by the service in June 2020.

Australian Banks pay out for incorrectly paying employees

Over the course of 2019 and 2020, two of Australia’s big four banks, Westpac and Commonwealth Bank (CBA), have begun the process of repaying thousands of staff who had been underpaid as a result of systems errors at both institutions.

Westpac announced in July 2020 that it would pay back AUD 8 million to around 8,000 employees. Westpac said that it did not apply the correct methodology for determining long service leave entitlements where staff had changed their working arrangements, such as moving from part-time to full-time. Westpac also said that, for long service leave entitlements, different rules applied to different employees based on their employment history and working arrangements. As a result of the error, some Westpac staff were overpaid, but these employees would not be asked to repay any money. 

CBA announced in April 2019 that it expected to pay AUD 15 million to current and former employees. CBA reportedly underpaid its staff and that of its subsidiary, BankWest, due to errors in its systems, including payroll and other human resources systems. This also resulted in problems calculating leave, superannuation and redundancy entitlements. Some of the problems reportedly dated back 10 years. In December 2019, it was reported that CBA had widened the investigation into the issues, examining the records of 250,000 current and former staff, going back as far as 2002. The average reimbursement was reportedly about AUD 220 per employee. Due to the wider investigation, CBA was reportedly expected to pay AUD 53.1 million in repayments to employees. 

You can read the press release for Westpac here: https://www.westpac.com.au/about-westpac/media/media-releases/2020/3-july/

You can read the press release for CBA here: https://www.smh.com.au/business/banking-and-finance/cba-to-pay-back-staff-53m-in-botched-pay-as-41-000-affected-20191213-p53jsi.html

If your firm subscribes to ORX News, then you can read the full stories and more like it on the ORX News website. You can view the Westpac story here and the CBA story here

Op risk losses categorised for easy analysis

Every single ORX News story is categorised to help you get the most from the data. The categories include the business line, event type, scenario category. All of this information makes it easier for you to use and analyse the loss events.

Extract of the data for this story from ORX News:

Business line: Retail Banking
Event type: Employee Practices & Workplace Safety
Loss amount (Total combined): AUD 61,100,000.00
Country: Australia
Scenario category: Unfair Treatment of Staff

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