Macquarie Bank is facing claims it underpaid private client advisers almost $5 million because it failed to pay them their minimum entitlements.
Twenty-one former employees have launched legal action against the bank over alleged underpayments, with individual claims averaging more than $230,000 and stretching back six years.
The advisers were allegedly underpaid $4.8 million in minimum weekly rates, annual leave, personal leave, leave loadings and public holiday penalty rates because they were paid solely by commission.
It is the seventh court action filed against Macquarie over the issue in three years with no signs of the claims stopping.
Lawyers estimate hundreds of advisers have been underpaid this way and warn claims could spread to other merchant banks.
“The issue, I believe, is widespread,” says Sydney lawyer Adrian Barwick, who represents the advisers and has brought three cases against the bank so far.
“The reason why is Macquarie Bank utilised a standard form of remuneration model that applied to its private client advisers around the country.”
The case is unusual because it involves underpayment of well-remunerated employees.
But despite the high pay, lawyers argue Macquarie is bound by the banking, finance and insurance award which requires it to pay employees a minimum wage or an agreed annual salary.
“The award does not permit an employer to pay an employee by way of a commission-only or purely incentive-based employment arrangement,” Mr Barwick said.
“There are other employers that, either over time and possibly even now, continue to remunerate persons in those sorts of roles on a commission-only basis and may actually be contravening the Fair Work Act through that practice.”
About 85 employees have taken legal action against the bank so far and the total value of claims is estimated to be in the tens of millions of dollars.
Two cases are understood to have settled and one case filed last year is set for a four-day hearing in April before Federal Circuit Court judge Salvatore Vasta.
Mr Barwick said his clients, whose claims range from $96,206 to $294,302, were determined to take their case to hearing.
A Macquarie spokeswoman declined to comment as the legal action was ongoing.
The bank is understood to be claiming that a monthly advance paid to the advisers, and that was later offset against their commissions earned, should also offset any amounts owing in terms of minimum wages and leave entitlements.
However, the advisers argue the bank can’t claim the payment is both a recoverable advance and a minimum wage.
‘Good money’ no excuse
The high-profile case comes as several major employers this year have admitted short-changing workers by millions of dollars.
Most recently Woolworths revealed it underpaid thousands of salaried managers an estimated $300 million by failing to assess their pay against what they would earned under the award.
Industrial Relations Minister Christian Porter has said he will consider simplifying the award system but rejected that complexity excused underpayments at large employers.
“It’s just not an excuse,” he said this week. “Large sophisticated organisations should be able to work in the existing award system.”
Employers could face even greater scrutiny next year as new rules will require them to record all hours worked by their salaried employees and conduct annual pay reconciliations to ensure they are not paid below the award due to excessive hours.
Professionals in various sectors, including financial planners and others covered by the banking, finance and insurance award, will be covered by the rules regardless of how high their salary is.
Mr Barwick said employers were failing to consider the application of awards to different categories of employees.
“Many of the advisers [in the Macquarie case] earned a significant commission but they did so through the sweat of their brows, and if Macquarie Bank was required to comply with the award, the fact the advisers earned good money is no excuse. It’s the law.”