The Reserve Bank of Australia will compensate nearly 1,200 staff after a review found it underpaid staff by a total of A$1.15 million ($778,000) over a seven-year period.
The central bank said on Wednesday it had begun repaying 1,173 current and former staff owed money after reviewing “more complex pay arrangements” related to how leave and leave are calculated.
It said most of the outstanding payments relate to termination benefits for former employees.
The central bank’s admission is the latest in a string of underpayment settlements by Australian companies and organizations over miscalculations of employee benefits. Mining company BHP Billiton said this month it would pay $280 million to make up for 30,000 workers who were underpaid over a 13-year period due to a mistake in handling leave.
Julia Angrisano, national secretary of the Financial Sector Union, said the bank’s apology was appropriate, but too many staff had been negligent in ensuring staff were paid properly.
“The RBA should set an example for the financial services industry by always paying its staff the right wages and proper entitlements,” she said. “Financial sector unions should not point out to the RBA that their internal processes are putting staff out of pocket.”
The incident came as the RBA faced sharp criticism for its effectiveness in tackling rising inflation and interest rate guidance, which its governor described as “embarrassing”.
The central bank last month hired Big Four accounting firm PricewaterhouseCoopers to review its payments system after underpayments emerged this year. The contract drew condemnation from politicians after a tax evasion scandal highlighted the amount of work the consultant carried out on behalf of the public sector.
The RBA and other organizations have announced that it will not contract with PwC for further work pending a review of the incident – in which a partner at the firm shared with colleagues the Treasury’s Confidential policy details, which the colleagues have used to win new business from clients — due later this year.
RBA Governor Philip Lowe said he would stay on if asked by Prime Minister Anthony Albanese’s government, whose current term ends in September. But his popularity and that of the central bank has been damaged by delaying the decision to raise rates, which in turn has hit mortgage holders.
The bank has raised interest rates 12 times in a little over a year to 4.1% this month and warned that further tightening of monetary policy may be needed to rein in rising prices.
Australia’s government announced in April the biggest reshuffle in the central bank’s 63-year history, proposing a new rate-setting committee and an overhaul of its culture.
Speaking at a Morgan Stanley conference in Sydney last week, Lowe said he believed the bank’s monetary policy was working to reduce the impact of inflation.
But his comments that people might have to work more and spend less have dominated the debate over the impact of the RBA’s rapid rate hikes on household finances.