The Commonwealth Bank of Australia (ASX: CBA) share price is in focus on legal proceedings.
What’s happening?
CBA acknowledged in a statement that the Fair Work Ombudsman (FWO) has commenced civil penalty proceedings in the Federal Court against CBA and CommSec, alleging contraventions of the Fair Work Act.
CBA have acknowledged that any instance of employees not being paid their correct entitlements is unacceptable.
The bank said a comprehensive remediation program has been underway since early 2018 to identify and address a number of issues dating back to 2010. The employee entitlement issues were self-reported to the FWO and publicly disclosed from early 2019, according to the bank.
In response to these issues, the systems and processes have been strengthened and CBA has not offered any new individual flexibility arrangements for more than two years.
CBA said that it (and CommSec) have co-operated fully with the FWO’s investigation and said it will continue to engage constructively with the FWO to seek to resolve these proceedings.
The bank also said that the payment of remediation to employees is substantially complete. The FWO has conducted an extensive review of the remediation.
CBA believes no further compensation payments will need to be made to employees who are the subject of these proceedings once the existing payments are completed.
How much could a fine be?
According to reporting by the Australian Financial Review,
the allegations are that CBA “knowingly underpaid thousands of employees more than $16 million by getting them to sign on to individual agreements that undercut union deals.”
The AFR also reported that the FWO is looking for penalties of up to $660,000 per breach for 7,425 workers since at least 2015.
So, theoretically, the fine could be possibly many hundreds of millions. But I’m no legal expert, so we’ll have to see how the court case goes.
Despite this news, the CBA share price ended up 0.2% today.
