Supermarket giant Coles reveals staff payment issue, sets aside $20 million to cover costs
The Government says it’s fed up with companies ripping off staff and has threatened further reforms if businesses don’t “pay your people properly”.
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The country’s top legal officer has delivered a warning to corporate Australia after Coles added itself to the long list of companies ripping off employees.
The major supermarket launched an investigation after similar underpayments were revealed at its rival Woolworths as well as Bunnings, the Super Retail Group and iconic restaurant chains.
Coles said this morning as it handed down its half-year results it would set aside $20 million to cover the payment discrepancies that occurred over a six-year period.
An incensed Attorney-General Christian Porter threatened to introduce new industrial relations reforms to name and shame those guilty of wage theft, which he described as an “endemic problem” in Australia.
“Get your house in order,” he told reporters this afternoon.
“We’ve had large organisations that involve themselves in any number of social issues that spend an enormous amount of time, money and effort self-promoting with PR campaigns and national advertising telling us how good they are.
“Pay your people properly.”
Coles chief executive Steven Cain apologised this morning to those impacted by the scandal, which related to a small group of salaried team members given a wage below the industry reward.
“We are working at pace with a team of external experts to finalise our review,” he said in a statement.
“Once completed we will contact all affected team members, both current and former, to remediate any identified differences in full.
“Coles has implemented steps to improve our systems and processes.”
RELATED: Woolworths underpays staff $300 million over nine years
RELATED: George Calombaris’ wage theft scandal is tip of the iceberg
Mr Porter implored companies to invest and redirect resources to make sure staff members are paid properly and basic workplace law is followed.
“Like most Australians, the Government has been appalled by the number of companies that have recently admitted short-changing their staff – in some cases by hundreds of millions of dollars,” he said.
“These are not unsophisticated businesses.”
The Morrison Government is due to introduce legislation in coming week to criminalise the most serious forms of worker exploitation with significant jail terms and fines, having already increased civil penalties.
“But it is clear to me that more still needs to be done to motivate companies to improve their performance, such as disqualifying directors of organisations that continue to get it wrong,” Mr Porter said.
The review into Coles’ payment irregularities discovered about 5 per cent of salaried team members at the company’s supermarket and liquor division had been underpaid.
Those covered by the enterprise agreement, however, were not ripped off by the giant retailer, which accounts for about 90 per cent of its workforce.
The retail union said it instigated the audit that led to Coles making the underpayment discovery.
The Shop, Distributive and Allied Employees Association (SDA) said it approached the supermarket company and more than 100 other major retailers in November to check up on payment issues.
“While all underpayments are wrong and should never occur, especially not in a major retailer with sophisticated accounting systems, the SDA acknowledges Coles has constructively engaged the SDA in its industry-wide audit,” national secretary Gerard Dwyer said.
“The SDA also acknowledges the company’s assurances that, having identified its problems, payments will be made to affected staff (including interest) and that Coles is working with the union to finalise the issues its audit has uncovered.”
In October, Woolworths revealed its own payments scandal involving nearly 6000 salaried team members over nine years, amounting to $300 million.
It also comes after a dismal stretch of widespread wage theft cases across retail networks and hospitality businesses.
These include Neil Perry’s Rockpool Dining Group, which owes staff at least $10 million, and fellow celebrity chef George Calombaris, who repaid workers $7.8 million.
Others include the ABC, Qantas, Commonwealth Bank, Sunglass Hut, and 7-Eleven.
Coles’ revelation comes as the company reported retail earnings of $725 million, confirming its earlier predictions a strong Christmas period underpinned a vastly improved second-quarter performance.
Sales growth in its key local supermarket division rose to 3.6 per cent, lifting second-half comparative sales growth to 2.0 per cent after a dismal first quarter.
Coles surprised the market earlier this month when it flagged earnings guidance of between $710 million and $730 million for the six months to January 5, easily beating the $660 million to $690 million that had been expected.
The company’s liquor division remains under pressure, however, as a result of range reviews and discounting activity.
Mr Cain said the summer’s bushfires had also affected liquor volumes, and a review of operations and an update would be provided at the full-year results announcement.
Coles’ 0.4 per cent jump in first-half retail earnings does not account for several non-repeating items, including new lease provisions, fuel sales agreements and the cycling out of discontinued operations such as Kmart, Target and Officeworks following the 2018 demerger from Wesfarmers. As such, net profit for the period was down 33.7 per cent to $498 million on a statutory basis.
— with AAP’s Alex Druce
If you were underpaid by Coles or any other major retailer and want to have a chat, get in touch at james.hall1@news.com.au or @James_P_Hall
Originally published as Supermarket giant Coles reveals staff payment issue, sets aside $20 million to cover costs