66,000 NAB workers owed $169 million in mass underpayment

The National Australia Bank has formally conceded it underpaid 66,000 of its workers $127 million over 14 years, with some workers owed more than $87,000 each as the result of problems that dragged on for seven years after the bank first reported them to the federal watchdog

NAB will repay a total of $169 million to staff, including superannuation and interest. It will make a record $2 million “contrition payment” to the Fair Work Ombudsman to effectively settle the legal side of the issue.

The issues stemmed from NAB’s failures to check it was paying staff at least the legal industry minimum under its pay deal with workers, to track staff hours and to correctly apply entitlements such as penalty rates. The bank first reported the issues to the regulator in 2019, but failed to fully fix them and the problems continued until this year.

Fair Work Ombudsman Anna Booth said companies had to invest in getting pay right.

“That’s showing... respect to workers who, just because they work for a bank, doesn’t mean they’re wealthy,” Booth said. “They have to pay their rent and their mortgages and put food on the table for their families.”

On average, affected staff will get about $2000. Fair Work Ombudsman inspectors had to examine 550,000 lines of payroll data to verify the underpayments. They were spread between issues such as incorrect base pay for part-time staff, which accounted for $37.9 million of the underpayments; problems with fortnightly pay calculations, which was $16.4 million of the total; $5.7 million of insufficient superannuation for staff on parental leave.

Booth said that when problems at large companies were not addressed over a long period “they become diabolical”.

Numerous other major institutions, including universities, law firms and retailers, have confessed to large-scale underpayments. NAB made $6.1 billion in profit on $22 billion in revenue last financial year.

Despite the contrition payment representing about 0.03 per cent of NAB’s annual profit, Booth said it was appropriate in the context of the complexity of the issues, the bank’s work to fix them, and the number of affected staff.

“I wouldn’t like to say we have we’re on some kind of trajectory to increase contrition payments,” she said.

“They are still determined on a case by case basis.”

The bank said it was working to find and repay all affected staff. It has repaid $155 million so far. It would invest in improving HR and payroll systems to stop another issue happening, it said in a statement. That work will then be checked by an external auditor hired by the bank.

“We take our payroll obligations extremely seriously as a basic element in employing people,” said NAB’s HR chief Sarah White. “We sincerely apologise for these unintended errors. We have and will continue to remediate anyone who has been impacted.”

The Finance Sector Union was contacted for comment.

Corporate Australia has often blamed the complexity of Australia’s minimum pay rules and union deals that can contain clauses built up over decades for underpayment issues. Unions have typically countered that companies should prioritise paying staff correctly rather than under-resourcing payroll departments, outsourcing the work, or increasingly, using AI.

“Just don’t let don’t let the algorithms make the decision,” Booth said.

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