IBM, an international technology company, has entered an enforceable undertaking with the Fair Work Ombudsman. IBM has been forced to back pay over $12 million to more than 1,600 Australian employees after they failed to pay entitlements such as superannuation and leave loading.

The Australian branch of tech giant IBM failed to apply the relevant awards to their employees because their salaried professionals were earning significantly above minimum award wage rates. Employees missed out on more than 15 different award entitlements such as superannuation, vehicle allowances and annual leave loading. IBM contact centre employees located in Ballarat were paid national minimum wage as opposed to the correct higher rates and entitlements set out in the relevant award.

The underpayments took place between 2012 and 2020. By February 2020 IBM had back paid 1,647 employees $12.3 million including interest. Individual back payments vary up to $145,000. More repayments are expected, the Fair Work Ombudsman requires IBM to calculate and pay the outstanding amounts by October 2020.

As a part of the undertaking, IBM are required to conduct an independent assessment of the rectification program and audit the compliance with workplace laws for the next two to three years. IBM must also make two contrition payments equal to 5.25% of the total underpayment amount. IBM is also required to fund an independent hotline to assist employees for the next 12 months.

This undertaking serves as a warning for other employers, who underpay their staff on a large scale. All businesses must meet their lawful workplace obligations, or risk large fines and repayments if they are not compliant.

ProcessWorx can help your business determine the relevant award and correct pay conditions for your employees to avoid underpayment cases like this. For more information contact ProcessWorx on (08) 9316 9896 or enquiries@processworx.com.au

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Written by Danielle McNamee

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