The Commonwealth Bank of Australia (CBA) has been fined $36,000 following revelations of significant underpayments to its staff. 

The case, which emerged from a broad compliance audit of the finance sector, found that the bank had underpaid 529 current and former employees over $1.67 million in long service leave entitlements between January 2012 and January 2021.

The audit, conducted by Wage Inspectorate Victoria, led to criminal charges against two CBA entities, CommSec and BankWest, for violations of Victoria's long service leave laws. 

The Melbourne Magistrates' Court heard that these entities had failed to pay over $69,000 in long service leave to 23 former employees, with individual underpayments ranging from $521 to $10,321.

During the court proceedings, CommSec pleaded guilty to underpaying eight former employees a total of $38,334, while BankWest admitted to underpaying nine former employees a total of $22,847. Each entity was fined $18,000 and ordered to pay a combined $12,000 in legal costs. 

Magistrate Kathryn Fawcett, in her sentencing remarks, said that “system errors are not an excuse for underpayment” and highlighted the expectation that large corporations like CBA should have robust systems in place to ensure compliance with employment laws.

Despite the severity of the offences, no conviction was recorded due to the early guilty plea and the absence of prior convictions. 

Magistrate Fawcett noted that without the early plea, she would have imposed a combined fine of $80,000.

Robert Hortle, Commissioner of Wage Inspectorate Victoria, said he is disappointed that such a significant underpayment occurred within a company of CBA's resources. 

Hortle also urged corporate Australia to scrutinise their long service leave obligations to prevent similar breaches.

The Long Service Leave Act 2018 mandates that employees who have worked continuously with one employer for at least seven years are entitled to long service leave. 

The underpayment charges were specifically related to employees whose service had ended, as current staff underpayment is not considered a contravention until the leave is due to be paid.

CBA has committed to rectifying the underpayments, already remediating approximately $60,000 to the affected 17 former employees, along with interest.