Macquarie Group will be forced to defend the structure of employment contracts in its private wealth unit for the second time in as many years, after a group of 15 former advisers hit the bank with legal action.
A statement of claim, obtained by AFR Weekend and lodged with the Federal Circuit Court of Australia this week, alleges a string of breaches of the Fair Work Act by Macquarie’s banking division.
The potential breaches relate to claims of underpaying advisers’ entitlements spanning their annual leave, public holidays, leave loading and compassionate and carer’s leave.
The group of former private client advisers claims Macquarie failed to comply with National Employment Standards and the modern award covering the banking, finance and insurance industry.
The John Wardman-led group is seeking to be reimbursed for total underpayments of $2.6 million plus interest, penalties and legal costs and also wants Macquarie to be issued with pecuniary fines.
The action comes amid heightened scrutiny of the financial services sector as explosive claims of poor advice and misdeeds were raised at the Hayne royal commission and as the competition regulator pursues a group of bankers and their employers for alleged criminal cartel conduct in court.
The underpayment case may also have wider ramifications for Macquarie which instigated a sweeping redundancy round in its private wealth unit last month . At least 55 jobs – including support staff – were said to be cut as Macquarie sought to refocus the stockbroking and advice business on wealthier customers.
A Macquarie spokeswoman on Friday said the bank “will be defending these proceedings”, without commenting further.
The Federal Circuit Court has scheduled a directions hearing for June 22.
While Macquarie’s advisers are employees, their pay is largely commission-based and linked to a percentage of the revenue they bring in. The court action claims Macquarie remunerated them through the commission structure, which sees employees paid a recoverable advance which did not satisfy Macquarie’s obligations to pay their award and statutory entitlements.
Last year, Macquarie is believed to have settled a similar legal matter brought by a separate group of eight former directors and advisers.
It alleged the bank had underpaid annual leave and long service leave entitlements to the tune of more than $838,000. The matter was lodged with the Federal Circuit Court ahead of a settlement being reached.
In the current action, Macquarie has 28 days to lodge a response with the court.
The adviser group is seeking orders that would impose penalties on Macquarie for the alleged employer contraventions. If the court sides with them, Macquarie could incur civil fines of up to $63,000 per contravention in some instances.
The advisers in the action are now at a range of rival firms including Shaw and Partners, Ord Minnett and Bell Financial Group, or have retired from the industry.
Mr Wardman, who was employed at Macquarie for 13 years until late 2016, is now a senior adviser at Shaw and Partners, according to LinkedIn.
Also among those involved in the action are advisers Anthony Doyle and Darrell Seeto, now at Shaw and Partners, and Murray Hewitt and former AFL player Jason Ball who are now employed by Ord Minnett.
The individual adviser underpayments range from $75,271 up to $290,209, according to the statement of claim.
The group is being represented by WilliamsonBarwick special counsel Adrian Barwick, who is the grandson of the late Sir Garfield Barwick, a former chief justice of the High Court of Australia.
The claimants and Mr Barwick declined to comment on the case.
Macquarie’s private wealth division has endured a number of issues in the past five years.
A two-year enforceable undertaking came to an end in 2015, although the corporate regulator put Macquarie on probation for another year.
The EU followed accusations of misclassification of clients, sloppy paperwork and rampant cheating on development exams.
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