Underpayment Ruling Hits Woolworths and Coles with Major Costs

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Australia’s two biggest supermarket chains, Woolworths and Coles, are bracing for a massive bill after a Federal Court ruling last week found they’d underpaid thousands of staff.

The court decision relates to almost 30,000 salaried store team leaders, with the judge ruling there was effectively tacit approval for staff to work beyond their official hours without proper pay.

On the ASX today, Woolworths told investors it expects to pay somewhere between $180 million and $330 million after tax to affected employees. On top of that, another $140 million to $200 million could be needed to cover things like superannuation, payroll tax and interest. The company stressed these figures are just “very preliminary estimates” and still highly uncertain.

Coles also weighed in, warning of an extra $150 million to $250 million in remediation costs. But the company pushed back against speculation, saying it’s still unclear exactly how the decision applies to its own operations.

Both companies have already made repayments — Woolworths about $330 million and Coles around $7 million — but the Fair Work Ombudsman and former employees behind the class actions say it’s not enough.

At the heart of the case is how work hours were handled. The watchdog says the relevant award set out a 38-hour work week, yet staff were effectively pushed into overtime with poor record-keeping, informal rosters, and issues around allowances and penalties.

Woolworths argues some managers were authorised to work up to 45 hours without being required to do extra overtime. Coles, meanwhile, says its managers had autonomy over their schedules and the Ombudsman has overestimated their working hours.

Either way, both supermarket giants are now staring down hundreds of millions more in payouts as the case continues to play out.

More updates to come on AusNewsLanka.