The Commonwealth Bank of Australia (ASX: CBA) share price is climbing slightly today despite news of legal proceedings launched against the company.
At the time of writing, the CBA share price is up 0.07% trading at $104.53 apiece. This means that in the past week alone, CBA shares have elevated almost 5%.
What did CBA announce to the ASX?
In its release, the bank advised that the Fair Work Ombudsman (FWO) had started civil proceedings against CBA and its stockbroking firm, CommSec.
The FWO alleges that Australia’s largest bank breached the Fair Work Act by not paying 7,425 of its employees their correct entitlements. Staff mainly in customer services roles were affected by the underpayment.
The total discrepancy came to around $16.44 million for the period between October 2015 and December 2020.
The matter was taken to the Federal Court following the FWO investigation.
CBA noted that a comprehensive remediation program has been underway since early 2018 to identify issues dating back to 2010. The bank self-reported the employee entitlement payments to the FWO and publicly disclosed them in 2019.
The bank advised that the underpayments had led to it strengthening its systems and processes to ensure the issue was not repeated.
All missing entitlement payments have since been remedied, and CBA believes no further compensation payments are required.
Furthermore, the company highlighted that it was constructively working with the FWO to resolve the proceedings.
The maximum penalty for each company for the contraventions is up to $666,000 per breach.
A date is yet to be determined for when the matter will be heard in the Federal Court.
CBA share price snapshot
The CBA share price continues its upwards trajectory to post a 50% gain in a year. When looking at 2021, its shares have moved almost 30% higher for the period.
CBA commands a market capitalisation of roughly $178.59 billion, making it the biggest company on the ASX.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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