Coles may face class action as Target underpayment revealed
The law firm that hit Woolworths with a $620 million class action for underpaying is considering taking action against Coles — and Target admits it also short-changed workers.
Business
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Target has joined the list of major retailers that have confessed to underpaying staff, just a day after former sister chain Coles said it too had short-changed workers.
It comes as the law firm which has hit Woolworths with a $620 million class action over underpaying workers says it is considering launching a case against Coles.
Adero Law says it is not surprised by the underpayments at Coles as a number of the supermarket giant’s employees had contacted it expressing concern about their wages in the wake of Woolworths admitting to massively short-changing its workers.
“We have received a number of expressions of interest from Coles employees telling us a very similar story to what our Woolworths group members are telling us,” Adero solicitor Kellie Pledger said.
“We will likely make a decision within the next week as to whether we will file a class action against Coles.”
Coles on Tuesday said it had set aside $20 million to cover underpayments impacting about 600 workers over a six-year period.
It is continuing to review whether other underpayments have been made.
Woolworths has owned up to short-changing 5700 workers $300 million over a decade in what stands as the nation’s biggest instance of worker underpayment.
In both cases the workers impacted were divisional managers that had been placed on annual salaries that buy out penalties, overtime and other allowances due under the General Retail Industry Award.
But the workers were still entitled to award penalty payments if their “rolled-up” salary delivered smaller pay packets than they could have earnt had they been on the award.
Adero lodged a class action against Woolworths in the Federal Court in December.
It alleges the retailer’s wage audit looked at the hours an employee was recorded as working rather than the hours they actually spent on the job.
Woolworths’ correct wage bill is likely to be $620 million when this is taken into account, Adero alleges.
Woolworths has dismissed the claim and says it will fully defend itself against the proceedings.
Ms Pledger said it was highly likely Coles was also underestimating its unpaid wage bill by not ensuring all hours worked by employees were paid.
“We believe the $20 million underpayment self-reported by Coles warrants further investigation,” she said.
“We see a lot of similarities with what Coles has come out and expressed in terms of its underpayment and what Woolworths has also expressed.”
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The Australian Retailers Association says the way retail workers are paid is too complex, catching businesses out as a result.
Ms Pledger rejected that argument, saying the details of the General Retail Industry Award were well publicised and easily accessible.
She said a slew of underpayment cases appeared to flow from companies constantly trying to classify a worker as being on the lowest possible wage scenario.
“I come from a HR background, I’ve worked in enterprise bargaining and I really don’t understand the wage interpretation issues that people claim,” Ms Plegder said.
“Based on our experience it has become quite apparent that Australian retail workers are routinely taken advantage of when it comes to receiving their correct pay.”
Meanwhile, Wesfarmers, which owns Target, on Wednesday said it had uncovered $24 million in “payroll errors”.
It came as the group handed down a first-half profit result buoyed by the performance of Bunnings, Kmart and Officeworks but weighed down by a sales slide at Target.
Wesfarmers said it was setting aside $9 million for “payroll remediation” at Target, but is yet to reveal how many staff have been affected.
In November, Wesfarmers announced it would pay $6.1 million to compensate more than 40,000 current and former Bunnings employees who had not received their full superannuation entitlements.
The Perth-based conglomerate has also put aside $15 million, as previously flagged, to compensate workers who were paid too little in its industrial and safety division, which supplies equipment, apparel and services under various brands.
Chief executive Rob Scott on Wednesday said monitoring and payment processes had been strengthened.
However, he said he could not rule out future underpayments, as “people make mistakes”.
“There have been some significant issues across payroll systems across the market which in part reflects the incredible complexity of the systems that we’re dealing with,” Mr Scott said.
“Complexity is not an excuse. We need to get this right.”
Wesfarmers on Wednesday reported a net profit for the six months to December of $1.21 billion, down more than 70 per cent from the same period a year ago during which Coles was spun out of the group.
Woolworths last year owned up to short-changing 5700 workers $300 million over a decade in what stands as the nation’s biggest case of worker underpayments.