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Woolworths underpaid staff by up to $300 million

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Woolworths has revealed that around 5,700 staff working in its supermarkets were underpaid, with total remediation expected to be up to $300 million.

In a statement on Wednesday, the supermarket giant said a review of payments between September 2017 and August 2019 found an “inconsistency” in pay for some salaried store staff, compared to staff paid under the new enterprise agreement which came into effect in early 2019.

Woolworths said that annual salaries for store workers should cover ordinary working hours and reasonable overtime, but that they were also entitled to be paid the higher of their contractual salary entitlements under the General Retail Industry Award.

As a result, the review found that for some staff members, the number of hours worked and when staff worked weren’t always part of the payment equation.

The group has analysed those two years of data, but suspects the issue could have extended back to 2010, with total remediation payments to hit between $200 million and $300 million.

“Woolworths Group is committed to fully rectifying these payment shortfalls and an extensive plan is in place to ensure salaried team members’ pay is correct and compliant moving forward,” the company said.

Woolworths Group reported a $1.75 billion profit for the year ending June 39.

When will the payments be made?

Woolworths said affected staff and former staff will receive their full entitlements including super and interest “as soon as possible”.

The company said this should be before Christmas, with the review to now be extended to all Woolworths Group businesses.

“As a business we pride ourselves on putting our team first, and in this case we have let them down. We unreservedly apologise. The highest priority for Woolworths Group right now is to address this issue, and to ensure that it doesn’t happen again,” Woolworths Group CEO Brad Banducci said.

Woolworths also said there is “no evidence” that the underpayment was deliberate, with more than 11 million individual records per year to be reviewed.

Former staff who suspect they have been affected have been told to visit team.woolworths.com.au, while an internal website has also been set up for current staff.

Yahoo Finance has contacted Woolworths for comment.

‘Woolworths, you’ve committed fraud and wage theft’

Wage theft was trending on Tuesday on Wednesday morning, with angry Australians venting their frustrations at another major business’ admission that it had accidentally underpaid staff.

“Woolworths , you've committed fraud and wage theft, and you need to be prosecuted,” said user Simon Rosenberg.

“Can’t wait to see yet another company get a gentle reprimand for vicious wage theft,” added Camden Luxford.

Jail time on the cards

Woolworths’ admission comes as unions push for 5-year prison sentences and massive fines for wage theft. The Australian Council of Trade Unions has urged the Attorney-General’s department to implement harsher penalties for underpayments.

In addition to five years jail, individuals could face fines of up to $2 million, while corporations could be set back $10 million, under the union’s proposal.

Fair Work Ombudsman ‘shocked’

In a statement, the Fair Work Ombudsman said it was shocked that another huge company has broken the law on a massive scale.

It said it will conduct an investigation into Woolworths’ case an “hold them to account”.

“Lately, we are seeing a disturbing number of large corporates publicly admitting that they have underpaid their staff. Some of these matters go back many years and several comprise millions of dollars owed to workers. This is simply not good enough,” Fair Work Ombudsman Sandra Parker said.

“It is particularly concerning that many of these corporates have enterprise agreements in place that they negotiated but then failed to properly uphold the minimum standards. These sorts of careless missteps by business can be costly, often running up into the millions of dollars across an entire workforce.”

Parker said Woolworths admitting to the underpayment wasn’t enough, and that companies should expect public court enforcement outcomes.

“I intend to take this issue up with Boards around the country, because frankly that is the level within organisations that should be taking an active leadership role on this issue, and seeking assurance about compliance from executive managers.”

“Companies and their Boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including court enforceable undertakings and litigation where appropriate,” Parker said.

Supermarket staff union ‘concerned’

The SDA Union, which represents supermarket workers, said it has been “concerned” about salary settings in the retail industry for a while.

“Whilst Woolworths has committed to rectifying these salary staff underpayments back to 2010, the SDA now calls on all retailers to audit their payroll settings especially for salary staff,” the SDA said.

“Salaried staff are not ‘Award free’ and their salary must exceed what they would have been paid if they were working under the award.”

The union said it will be in stores to talk to staff.

More to come.

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