Supermarket giants Woolworths and Coles have warned of hundreds of millions of dollars in potential remediation costs following last week’s Federal Court ruling on alleged staff underpayments.
Both companies informed the ASX about the possible financial impacts of the judgment, which affects nearly 30,000 employees. The court handed down a decision on four cases after a watchdog claimed there was tacit approval of illegal practices in many stores.
Woolworths indicated that additional payments to salaried store team leaders could range from $180 million to $330 million after tax. An extra $140 million to $200 million in superannuation, payroll tax, and interest may also be added once the final remediation is determined. Woolworths emphasized that these figures are preliminary estimates with considerable uncertainty.
Coles, also affected by the class action ruling, projected further remediation costs of between $150 million and $250 million. The company cautioned that these estimates are speculative and may not fully reflect how the decision applies to Coles’ specific circumstances.
To date, Woolworths and Coles have repaid $330 million and $7 million, respectively, to managers who were underpaid as salaried employees. However, the Fair Work Ombudsman and former grocery staff involved in two class actions argue that the companies should be required to pay more.
The watchdog stated that while the relevant award prescribed a 38-hour workweek, there was tacit approval for employees to work regular overtime. It also highlighted failures in the use of “informal” rosters, time off in lieu, and record-keeping of overtime, penalties, and allowances.
Woolworths countered that some employees were authorized to work up to 45 hours per week, and overtime beyond that was not mandatory. Coles argued that managers had autonomy over their hours and claimed the Fair Work Ombudsman overestimated the actual working hours and days.
