Woolworths, Coles’ underpayment scandal bill could exceed $1 billion

1 week ago 3

Woolworths and Coles are collectively setting aside a further $780 million to pay staff back for historical underpayments in what has already become the biggest wages scandal in Australian history.

On Friday, the Federal Court determined that Australia’s two largest supermarket companies failed to keep accurate records of rosters, overtime and other entitlements for salaried workers for years, stretching back more than a decade.

Woolworths is setting aside more money for back pay.

Woolworths, which has already paid back more than $486 million to staff, will set aside a further half a billion dollars: $180-330 million in remediation (post-tax), and a further $140-200 million post-tax for interest, superannuation and payroll tax.

“This decision will require significant and widespread changes to accepted retail practice for Woolworths Group and Australian businesses, large and small,” the company said in a statement.

Meanwhile, the gulf is widening between what Woolworths has set aside and what its smaller rival, Coles, is provisioning. To date, Coles has repaid $31 million with a further $50 million to be paid, but in an update today, it estimated it would have to back-pay an additional $250 million.

“Coles’ preliminary estimate is that further remediation of between $150 million and $250 million may be required to reflect the findings of the court, including interest and on-costs,” the supermarket stated.

The estimate doesn’t include penalties or class action costs. Coles also hinted that it may exercise its right to appeal.

“Coles cautions the market from relying on speculative estimates which may not have adequate regard to the application of the decision to Coles’ specific circumstances.”

A case management hearing will be heard on October 27, which may provide further determinations.

Last week’s Federal Court judgment brought together four separate proceedings launched by class action law firm Adero Law and the Fair Work Ombudsman against the two supermarkets in 2019 and 2020.

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