The recent announcement that Westpac Banking Corporation has back-paid nearly 47,000 current and former staff over $50 million and signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman (FWO) serves as a stark and crucial reminder to all Australian employers, particularly large corporates, of the absolute necessity of accurate payroll governance and compliance.
The bank’s underpayments, spanning an 11-year period (January 2014 to February 2025), were not attributed to deliberate malice but to systemic failures. These included inadequate record-keeping, reliance on complex systems requiring manual adjustments, and general shortcomings in governance and compliance oversight. This case demonstrates that size and resources are no safeguard against significant legal and financial liability when payroll systems are flawed.
The Scope of the Underpayment Breach
The FWO found Westpac was in breach of multiple Westpac Group enterprise agreements, with entitlements being underpaid across the board. The complexity of modern awards and enterprise agreements means payroll errors can quickly snowball.
The key entitlements underpaid were varied and included casual loading and minimum wages for ordinary hours, various allowances (such as higher duties and meal allowances), and weekend penalties. There were also errors related to termination payments and leave payments, including the incorrect deduction of leave and time off in lieu. Furthermore, underpayments occurred concerning superannuation (under the enterprise agreements) and issues related to incorrect grade and classification levels.
To date, Westpac has backpaid a total of over $50.26 million, plus nearly $9 million in interest and applicable superannuation. The resolution also included an $800,000 contrition payment to the Commonwealth Consolidated Revenue Fund. While the average back payment was approximately $1,000, some individuals received up to $56,085.
Understanding the Enforceable Undertaking (EU)
An Enforceable Undertaking is a voluntary, legally binding agreement accepted by the FWO as an alternative to more severe court proceedings. It is used when an employer demonstrates a genuine commitment to fixing non-compliance and ensuring future adherence to workplace laws.
In this instance, the FWO considered the EU appropriate due to Westpac’s full cooperation and self-reporting of the issue in 2020. However, the terms of the EU are stringent and act as a blueprint for proactive compliance for all large employers.
Key Requirements for Future Compliance
The EU imposes several strict requirements on Westpac to prevent future failures. These include strengthening governance by ensuring the board is appropriately informed of compliance matters and establishing a dedicated channel for employees to raise concerns about entitlements. Westpac must also provide relevant staff with mandatory training on monetary worker entitlements. Critically, the bank is required to commission an independent audit to check future compliance with workplace laws and report its findings back to the FWO. Finally, the EU mandates regular consultation with employees and the Finance Sector Union.
As Fair Work Ombudsman Anna Booth highlighted, this case is a powerful reminder that “sound governance and proper board oversight of employee wage and entitlement compliance” cannot be overstated. When unchecked, small errors in payroll systems and processes can escalate into decades-long, multi-million-dollar liabilities.
How NB Employment Law Can Help
The Westpac case demonstrates the immense risk associated with complex payroll systems and the failure to correctly apply terms in enterprise agreements and underlying awards. For employers, the choice is clear: proactive compliance is far less costly and disruptive than reactive remediation.
NB Employment Law are lawyers for employers, specialising in helping Australian businesses navigate the complexities of employment and industrial relations law. We can assist your business to avoid the costly errors and reputational damage seen in this high-profile case.
Our expert services include:
- Employment Contract and Policy Review: Ensuring your contracts, enterprise agreements, and policies are robust, legally compliant, and correctly align with the relevant awards.
- Wage Dispute Resolution and Compliance Audits: We conduct thorough internal audits to proactively identify and resolve any existing underpayment risks, including those related to allowances, loadings, and leave entitlements, before they become FWO matters.
- Management Training & Education: We provide mandatory training for your management and payroll teams to ensure they understand their obligations and the correct application of entitlements.
Don’t wait for a self-report or an FWO investigation to identify a systemic issue.
Protect your business from multi-million-dollar compliance failures.
If you are an employer operating under complex industrial instruments or have concerns about the accuracy of your current payroll system, the time to act is now. Proactive legal advice and system review are essential to mitigating risk.
➡️ Book a confidential consultation with NB Employment Law today to review your wage compliance processes and ensure your business is protected.