Coles supermarket giant fails to pay Victorian staff long service leave

The supermarket giant faces a landmark ruling after failing to pay proper long service leave to staff. Here’s what happened.

Coles has been hit with a fine after pleading guilty to robbing past employees of their full long service leave entitlements. Generic pic. Picture: Jonathan Ng

Coles Australia has pleaded guilty to underpaying long service leave to Victorian employees in a landmark case, setting the bar for “corporate cowboys.”

The court heard an audit revealed Coles failed to correctly pay 4096 Victorian employees their long service leave, totalling $697,016.

The Aussie supermarket giant pleaded guilty at the Melbourne Magistrates' Court to seven counts of failing to pay long service leave entitlements upon termination of employment on March 30.

The charges relate to a sample group of 24 past employees who between October 2019 and April 2020 were missing long service leave payouts after they left the company.

The breach first came to light when a past employee contacted the Wage Inspectorate Victoria, triggering an investigation into Coles.

The court heard the error was limited to Victorian employees who had taken unpaid leave.

Wage Inspectorate Victoria legal counsel Diana Price told the court the issue is larger than the charges and said: “(Coles) failed to calculate long service leave in a systematic failure … the charges are reflected as a portion of a larger issue.”

Coles legal representative Matthew Minucci told the court an administration oversight was responsible and said there is no evidence to suggest the underpayment was deliberate.

“The contraventions are on the lower end of seriousness … there is no evidence to say it was in anyway deliberate,” Mr Minucci said.

“This is not a wage theft case.”

Mr Minucci stated an audit of 78,000 long service leave employees was later given to the wage inspectorate.

The case is the first of its kind to be prosecuted under Section 9 of the Long Service Leave Act of 2018, which can see employers and individuals fined and penalised for failing to pay employees properly.

Coles could face up to 60 penalty units per employee for each day the offence continued in addition to a hefty fine.

Magistrate Foster said it was important the court took time to consider how Coles would be sentenced because the landmark case would set a precedent when prosecuting future “corporate cowboys.”

“To think that a corporate cowboy could be liable to a $10,000 penalty, it would encourage them,” Mr Foster said.

“If this is the first offence of this nature, we want to get it right on the first go.”

The matter will return to court next month for sentencing.

Coles Australia has contacted individuals and returned funds where long service leave was found to be owed.