Insurance Australia Group Limited (IAG) entities have employees in back pay of more than $21 million owed under federal workplace laws and have signed a mandatory undertaking (EU) with the Fair Work Ombudsman.
IAG, Australia's largest general insurer under brands including NRMA Insurance, RACV, CGU, SGIO, Swann Insurance, WFI and ROLLiN, self-reported non-compliance issues to the regulator in December 2020.
IAG identified the underpayments when it conducted an internal review.
The companies entering the EU with the Fair Work Ombudsman are Insurance Australia Group Services Pty Limited and Insurance Manufacturers of Australia Pty Limited, both of which are subsidiaries of IAG and employ more than 90 percent of IAG's workforce.
The underpayments were caused by fundamental deficiencies in the operations of the IAG entities, including a lack of time and attendance systems, which resulted in employees not being paid for their actual hours worked.
The IAG Entities also failed to make adjustments and increase payments necessary to ensure that the benefits they were paying employees under their enterprise agreements were not less beneficial than the minimum employee benefits under the applicable awards.
This undermined the statutory minimum employee benefits and left employees worse off for many years. Employees were underpaid for overtime, weekends, holidays and shift work entitlements, as well as the minimum wage, holiday entitlements, allowances and other entitlements.
Low-paid workers were located in every state and territory in Australia and worked in a range of positions. IT specialists, IT support workers, front-line claims clerks, and call center employees were among the most frequently underpaid workers.
Low-wage workers also included management, customer service, and sales employees, as well as many consultants, evaluators, insurance companies, analysts, sales, and middle-level managers.
IAG entities paid more than 19,000 current and former employees more than $21 million in wages and benefits owed under federal workplace laws between 2013 and 2023, as well as several million dollars in benefits and retirement benefits.
Overall, back payments average just over $1,000, although 14 workers received back wages of more than $200,000.
In addition, the IAG Entities for backpaid workers have a total of $16.2 million in long service leave benefits that would have accrued under state and territory laws between 2013 and 2022. State and territory long service leave entitlements are not part of the Fair Work Ombudsman Act. jurisdiction but the payment was part of IAG's reform programme.
Anna Booth, Fair Work Ombudsman, said the EU had been accommodating as IAG embarked on a comprehensive overhaul of its compliance and governance systems that would protect its workers, and implemented a wide-ranging reform program that includes correcting significant underpayments dating back to the post-platform years that Six years of restrictions.
Ms Booth said: “IAG had significant, long-standing compliance breaches underpinned by flawed processes. However, once identified, IAG responded strongly and invested heavily to fix these issues, including through new measures to ensure all its workers are paid correctly in the future.” “.
“IAG also cooperated fully with the investigation by the Fair Work Ombudsman, providing full disclosure of information about its approach to help us efficiently assess the robustness of its remedy and approach to compliance in the future.
“Their new procedures include commissioning, at their own expense, an independent review of the new time, attendance and payroll systems to ensure they are in full compliance with all aspects of workplace laws.
“I commend IAG for its commitment to adjusting its governance processes to ensure that the IAG Board has a much better awareness of potential non-compliance issues.
“IAG has made the most significant commitment in terms of board oversight that we have seen in any EU consortium with the FWO to date.”
Ms Booth said it was disappointing that employers in large, well-resourced companies continued to fail in their basic duty to fulfill their workers' legal entitlements, and boards must establish a culture of compliance.
“A company’s compliance culture starts with the board, including how it defines its risk appetite, performance metrics and reporting,” Ms Booth said. “Many boards need to do better, especially with increasing penalties and sentencing for criminal offenses starting to January 2025.”
“Every manager needs to ensure that the company they are responsible for has systems in place that prioritize compliance. By doing this, they also reduce the risks and costs to the business associated with non-compliance.
“Large corporate employers need to give a much higher priority to putting in place systems and governance that ensure full statutory entitlements are paid to employees, year after year.”
The European Union requires IAG entities to conduct training for managers on workplace relations, and also requires IAG companies to post notices about the EU and its violations on their intranets and websites.
IAG must also pay $650,000 in restitution to the Commonwealth Consolidated Revenue Fund.
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