GFC cost-cutting exercise lands CMA in hot water

National recycling company forced to backpay staff almost $140,000 after cutting wages during the global financial crisis

June 22, 2011

A national process and recycling company that cut wages below the minimum rate to offset the impact of the global financial crisis has had to reimburse employees almost $140,000.

The CMA group of companies, which includes CMA Corporation, CMA Recycling and CMA Assets, has compensated 73 employees $138,019 for underpayments between July 2009 and March last year.

The underpayments affected drivers, yard hands, furnace workers, labourers and oxy cutters Australia-wide, and were exposed when the Fair Work Ombudsman acted on allegations from the Australian Workers Union and investigated CMA.

The company had asked staff to take a pay cut to avert job losses due to the economic downturn but the company reduced wages below the minimum rate of the employees’ workplace agreements.

"It is unlawful to reduce an employee’s pay rate below the minimum rate in the relevant industrial instrument – even if the employer has a handshake or written arrangement with the employee," Fair Work Ombudsman Executive Director Michael Campbell says.

While the Ombudsman did not launch legal action, it has slapped an enforceable undertaking on CMA that sets out strict requirements the company must meet.

This includes issuing a written apology to underpaid workers, posting a public apology and promising to comply with workplace relations laws.

CMA must also report to the Ombudsman on new systems it develops to ensure they are compliant and order all state managers, human resources and payroll staff to participate in workplace relations training. CMA will need to cover the costs.

Furthermore, the company must report employment details to the Ombudsman for the next two years, including classifications and pay rates.

As part of the undertaking, CMA must commission a workplace law specialist to prepare a compliance manual to be distributed to staff.

In a written apology to workers, the company says: "CMA Corporation apologises to all past and present employees for failing to comply with its lawful obligations. Furthermore, CMA Corporation gives its employees our commitment that the proscribed conduct will not occur again."

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