Suncorp has made $32 million in back payments to more than 15,800 employees at its insurance businesses who were underpaid between May 2014 and March last year, after self-reporting the matter in 2020 to the Fair Work Ombudsman.

The business also entered into an Enforceable Undertaking (EU) with the Ombudsman, committing to “stringent measures” such as independent audits to ensure staff are remunerated correctly going forward.

Suncorp must make a $520,000 contrition payment to the Commonwealth Consolidated Revenue Fund as part of the EU.

The Ombudsman says the underpayments and EU relate to employees at Suncorp Staff, Suncorp Insurance Services and Australian Associated Motor Insurers (AAMI). 

The underpayments arose from Suncorp’s “inconsistent application of the term ‘Rostered Employee’ and the Rostered Employee clause – such employees being entitled to shift penalties – in its Enterprise Agreements,” the Ombudsman said in a statement today.

As a result, it led to the underpayment of entitlements including overtime, shift loadings, weekend penalties, annual leave loading, minimum rate of pay, long service leave, redundancy, meal allowances and superannuation.

“The underpaid current and former employees worked nationwide in a variety of roles in the insurance arm of the three companies, including as advisors, assessors, customer support staff, technical staff, team leaders and managers,” the Ombudsman said.

More than 99% of the more than $32 million owed has already been paid. This includes about $26 million in wages and entitlements, $4.5 million in interest and $1.4 million in superannuation.

Ombudsman Sandra Parker says an EU was appropriate because Suncorp had cooperated and demonstrated a strong commitment to rectifying underpayments.

“These measures include engaging, at the company’s own cost, two independent annual audits to assess its compliance with workplace laws,” Ms Parker said.

“This matter demonstrates the importance of employers placing a high priority on compliance, including with all clauses in their Enterprise Agreements. Suncorp’s incorrect application of particular clauses has led to underpayment of basic employee entitlements and a large back-payment bill.”

The Ombudsman website says EUs are used to fix a problem instead of taking an employer to court. An EU contains obligations to ensure underpayments or other breaches of workplace laws are not repeated.

A spokesperson for Suncorp says the insurer has nothing further to add to the Ombudsman’s statement.

Suncorp had flagged the underpayment matter in May 2020 in an investor update about covid impacts on the business.

The update said an internal review of pay and leave practices in November 2019 “identified inconsistencies in relation to the group’s rostering and pay systems, which may have led to errors in payments of overtime, shift penalties and public holiday loadings”.

The business estimated at that time remediation costs and investments in new processes to prevent future underpayments at $40-70 million. These provisions have been made in FY2019/20.

“As a Suncorp employee of long standing I am incredibly disappointed that we have let our people down – there is no excuse and we need to get this right,” CEO Steve Johnston said in the update.

“I want to offer my sincere apologies to those who may have been affected.”