The Westpac Banking Corp (ASX: WBC) share price closed in the red today. It appears the big four bank is copping some heat amid the latest news from the Fair Work Ombudsman. One of Australia's biggest banks is back-paying 6,400 employees, totalling $6 million.
At the closing bell, shares in Westpac were down by 0.35% to $22.75. As a result, the Westpac share price is now more than 16% below its 52-week high set in June.
Let's take a look at the payment blunder and what it means for the company.
Underpayments weigh on the Westpac share price
The Westpac share price finished the day lower amid news the company underpaid employees.
According to the release, Westpac has entered into an Enforceable Undertaking (EU) with the Fair Work Ombudsman. In turn, the $83 billion bank will fork out a total of $6 million owed to 6,400 former and current employees.
The discrepancy was self-reported in April 2020 following an internal review of Westpac's long service leave entitlements.
It came to the company's attention that it had failed to correctly account for overtime work, average weekly hours, bonuses, commissions, and sick leave when calculating the length of leave accrued. On top of this, some Westpac employees were placed on the entirely wrong long-service leave plan.
The leave entitlements involved in the payment debacle span from 2014 to early 2021.
Importantly, Westpac has already paid back the majority of employees. However, the remaining employees will need to be paid back by 30 November 2021. Fortunately for those affected, the back pay includes interest and superannuation on top of the original amount.
Commenting on the event, Fair Work Ombudsman Sandra Parker stated:
Under the Enforceable Undertaking, Westpac has 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 check its workplace compliance each year for the next two years.
What else?
It doesn't stop there for Westpac and the anchor on its share price. In addition, under the EU Westpac is obligated to make a $343,866.96 contrition payment to the Commonwealth's Consolidated Revenue Fund.
This will serve as a penalty to the ASX-listed bank without the lengthy litigation process. Furthermore, the bank is required to formally apologise to its employees.
Lastly, Westpac will need to post notices on social media and in newspapers stating its wrongdoings.
