IBM caught underpaying 1,600 workers by $12 million
Global technology technology company IBM has back-paid 1,647 workers a total of $12.3 million in lost wages after it failed to pay workers the correct award rates, with further underpayments still to be identified.
Underpaid IBM staff, who were casual workers as well as technical professionals who had to operate a vehicle as part of their job, were not paid the right superannuation, vehicle allowance, or annual leave during underpayments that happened between 2012 2020.
Workers were covered under various awards such as the Professional Employees Award 2010, the Banking, Finance and Insurance Industry Award 2010 and more, but weren’t paid the correct rates, according to the Fair Work Ombudsman.
Some workers in the Ballarat office were paid the national minimum wage, rather than the award wage.
In total, IBM failed to adhere to 15 different Award entitlements and conditions.
Some workers were underpaid less than $1, while others were underpaid by more than $145,000, according to the Ombudsman.
And IBM expects to uncover even more underpayments, which it is required to fully back-pay by 16 October according to an enforceable undertaking.
IBM self-reported the underpayments to the Ombudsman last year after it found it hadn’t applied the correct award rates.
Fair Work Ombudsman Sandra Parker said IBM had demonstrated it was committed to rectify underpayments.
IBM has also agreed to pay for an external auditor to independently assess its rectification efforts and audit its compliance with workplace laws over the next couple of years.
“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,” Parker said.
“Any employers who need help meeting their lawful workplace obligations should contact the Fair Work Ombudsman for free advice.”
IBM has to make two contrition payments equalling 5.25 per cent of the company’s total underpayments to the Commonwealth’s Consolidated Revenue Fund before the end of November.
If any further underpayments are discovered, the contrition payment rises to 7 per cent.
IBM will have to fund an independently operated hotline to assist potentially underpaid staff, and has to display notices in public and in the workplace detailing its law breaches, as well as apologise to staff.
According to a statement from the tech firm, IBM immediately moved to repay all affected employees with interest after self-disclosing the underpayments following an internal review.
“Many payments were less than $1,000 and related mainly to motor vehicle usage. We also found parts of our workforce had annualised salary arrangements that did not comply with minimum award entitlements, while others were paid at the prescribed national minimum wage rate, rather than the rates outlined by modern awards,” the spokesperson said.
“This was a genuine error and we sincerely apologise to all current and former employees who have been affected.
“Our employees are critical to the success of IBM and our clients. We are fully committed to all compliance measures and corrective actions agreed with the Fair Work Ombudsman to ensure this does not happen again.”
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