FWO said the full assessment of amounts owed to current and former employees was yet to be completed.
Australian government independent statutory agency, Fair Work Ombudsman (FWO) has found IBM Australia underpaid about 1300 former and current employees, AU$6.6 million ($7.9 million including superannuation contributions, interest, and lost earnings on superannuation).
The investigation into IBM Australia began in early May in 2019. At the time IBM notified the FWO that it had become aware the company had:
- had failed to apply the relevant modern awards to parts of their workforce
- instead of applying modern awards IBM had deployed a structure of annualised salary arrangements for their permanent workforce
- the National Minimum Wage under the FW Act had been applied to their casual workforce
- because of not applying modern awards a significant number of employees had been underpaid; and IBM had commenced an assessment of amounts owed to current and former employees.
At the time IBM advised they had calculated that roughly AU$6.6 million in underpayments was owed to approximately 1,300 current and former employees (AU$7.9 million including superannuation contributions, interest, and lost earnings on superannuation).
However, FWO said the full assessment of amounts owed to current and former employees was yet to be completed.
The underpayments mainly resulted from employees not being paid travel related entitlements under modern awards.
On 7 May 2019, IBM wrote to all current award-covered employees about their review, and their finding that certain policies did not fully align with modern awards.
As at the date of execution of this Undertaking, IBM have advised that they have commenced back paying employees, including paying interest on back payments, and have also made payments in relation to lost superannuation contributions, including in respect of lost earnings on superannuation contributions.
IBM have advised the FWO that they continue to conduct their assessment and rectification program and remain committed to ensuring all impacted current and former employees are paid for any underpayment of workplace entitlements.
Under the agreement with FWO, IBM has agreed by 11 November 2020 it provide the agency with evidence of all payments made to current and former employees to rectify the underpayments.
If any former employees to whom Underpayments are owed cannot be located by 20 December 2020, IBM will pay the underpayment amounts owing to those employees to the Commonwealth of Australia in accordance with section 559 of the FW Act.
IBM will complete the required documents supplied by the FWO for this purpose.
In the event that the FWO is subsequently able to locate and contact any former IBM employees to whom underpayments are owed, the FWO will (in addition to its obligations under section 559 of the FW Act) notify IBM in writing of the name and contact details of the former employee.
Also within 28 days of receiving any such notice IBM will pay the former employee interest on the amount already paid by IBM to the Commonwealth of Australia in respect of that employee, calculated for each financial year from the date that the employee first became entitled to that amount up until the date on which IBM paid the underpayment amount owing to the employee to the Commonwealth of Australia pursuant to clause 19 above, using an interest rate that is 5.5 per cent.
