Tech giant IBM has been forced to pay over $12 million to Australian staff to whom it neglected to pay entitlements, including superannuation and annual leave loading.

IBM entered into an enforceable undertaking with the Fair Work Ombudsman last year after voluntarily reporting that it underpaid 1,647 staff between 2012 and 2020.

“Under the enforceable undertaking, IBM has committed to stringent measures to comply with the law and protect its workforce,” said Fair Work Ombudsman, Sandra Parker.

“This includes engaging, at its own cost, an expert auditing firm to conduct an independent assessment of the outcomes of its rectification program and to audit its compliance with workplace laws over the next two to three years.

“This matter serves as a warning to all employers that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale.”

Staff across the country should have received entitlements under various industry awards but because many employees were being paid salaries well in excess of minimum award rates, IBM neglected to also apply other award features such as travel allowances and superannuation.

Casual staff in IBM’s Ballarat call centre were also paid the minimum wage instead of their much higher award rates.

IBM has issued payments between $1 and $145,000 to affected individuals, including interest and lost earnings on superannuation.

In a statement, the company said “many payments” were below $1,000 and related to vehicle use for work.

“We also found parts of our workforce had annualised salary arrangements that did not comply with minimum award entitlements, while others were paid at the prescribed national minimum wage rate, rather than the rates outlined by modern awards,” IBM said.

“This was a genuine error and we sincerely apologise to all current and former employees who have been affected.

“Our employees are critical to the success of IBM and our clients. We are fully committed to all compliance measures and corrective actions agreed with the Fair Work Ombudsman to ensure this does not happen again.”

The company is conducting a major audit of its employee benefits and has until 16 October to finalise its payments.

Fair Work expects the remaining payments to be “significant in size”.

In addition to the back payments, IBM will have to make ‘contrition payments’ equal to 5.25 per cent of all its underpayments – around $630,000 so far.