IAG apologizes for payroll mishap, ensures fix

The issue was due to its manual submission of entitlement claims.

Insurance Australia Group (IAG) confirmed it has entered an Enforceable Undertaking (EU) with the Fair Work Ombudsman (FWO) regarding the underpayment of certain employee entitlements and outlined steps to prevent future errors, it said in an announcement.

In February 2020, a proactive review of payroll processes identified underpayments affecting 6,094 current employees and 14,117 former employees, including overtime, allowances, and superannuation contributions.

Efforts have focused on remediating impacted employees, with payments, including interest, made in 2022 and 2023. 

A further payment was made to the Commonwealth Government for former employees who couldn't be contacted.

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IAG apologised to the affected employees. The key cause was its payroll system, requiring manual submission of entitlement claims.

To prevent future issues, new controls and payroll processes have been introduced, along with investment in an automated time and attendance system, set for implementation by September 2024.

Remediation payments and related costs were provisioned as part of its FY21 Financial Results. 

As part of the EU, IAG will make a $650,000 contrition payment to the Consolidated Revenue Fund, falling within the existing provision for payroll compliance review.