IBM repays millions to staff after messing up its own payroll

$9m already coughed up with more to come, plus 'contrition payments’ to Australian government

IBM’s Australian limb underpaid 1,647 staff and has been forced to pay them AU$12.3m in back pay (US$8.97m or £6.98m) and make “contrition payments” to Australia’s government.

Australian industrial relations laws and rates of pay can be notoriously variable depending on staff qualifications and duties. IBM appears to have run afoul of some details as its transgressions mostly involved vehicle allowances, payments into employee pension funds and the odd Australian practice of topping up pay packets by a little when staff take their holidays. While some of the amounts owed were in single figures, one workers was out of pocket to the tune of AU$145,000.

IBM has form messing up Australian payrolls, having been involved in the billion-dollar blowout of a payroll project in the State of Queensland’s Department of Health.

The Office of Australia’s Fair Work Ombudsman, an agency with broad industrial relations powers, said Big Blue “had cooperated with the investigation and demonstrated a strong commitment to rectifying all underpayments.”

But IBM has still been required to agree to an Enforceable Undertaking that requires it to conduct further calculations on what it got wrong and arrange repayments, then make two “contrition payments” to Australia’s government. Those payments will be equal to 5.25 per cent of the underpayments IBM identifies for all employees.

IBM Australia has also “committed to stringent measures to comply with the law and protect its workforce. This includes engaging, at its own cost, an expert auditing firm to conduct an independent assessment of the outcomes of its rectification program and to audit its compliance with workplace laws over the next two to three years,” said Ombudsman Sandra Parker.

IBM appears to have erred, rather than to have intended to underpay staff. However, numerous large Australian retailers and universities have been caught out after under-paying staff by design or after just not making enough of an effort to pay the right amounts. The practice has come to be known as “wage theft” and the Ombudsman and Unions have criticised it heavily.

Ombudsman Parker did not use the term in this case, but IBM’s name is likely to be appended to a list of shame for some time to come regardless of its decent response to this situation. ®