By Dominic Powell and Anna Patty
Attorney-General Christian Porter has warned companies will soon be "absolutely and utterly compelled" to pay staff correctly after supermarket giant Coles revealed on Tuesday it had underpaid about 600 staff $20 million over the past six years.
The company identified underpayments for its salaried team members across its supermarkets and liquor businesses, becoming the latest major retailer to be caught up in an underpayment scandal.
In an announcement on Tuesday morning released along with the company's half-year results, Coles revealed under 1 per cent of its team members had been underpaid due to differences between their remuneration and the General Retail Industry Award (GRIA).
The underpayments occurred over the past six years and primarily affected salaried department managers across its supermarkets. The company has flagged $12 million in back payments for those store members and $4 million in interest and additional costs.
Five per cent of the company's liquor salaried managers were also underpaid, with Coles flagging $3 million in provisions for backpayment and an additional $1 million in interest and costs.
Mr Porter put corporate Australia on notice, saying they needed to "get the message" and "get their house in order", or face the wrath of the government's planned legislation, which will seek to criminalise wage theft.
"If they haven't got that message, well, then they are going to be absolutely and utterly compelled to in the future by the most vigorous, robust and complete set of laws around wage underpayment that Australia's ever seen," he told reporters on Tuesday.
He also indicated the company could face penalties under the proposed new laws, noting they were "inescapable".
Coles chief executive Steven Cain apologised to staff who had been "unintentionally affected" by the underpayments and said the company was currently working "at pace" with auditors Deloitte and lawyers at Herbert Smith Freehills to complete a review into the underpayment.
In light of Woolworths' $300 million underpayment scandal, which also related to discrepancies between the general award and worker pay rates, there are concerns the full quantum of the underpayment may be higher than the $20 million stated.
Coles has revealed it underpaid salaried staff members $20 million over the past six years.Credit: Bloomberg
Retail and Fast Food Workers Union secretary Josh Cullinan said the union had been investigating the matter and estimated the underpayment was in excess of $20 million.
"Twenty million doesn’t come close," he said.
However, Gerard Dwyer, National Secretary of the Shop, Distributive and Allied Employees' Association said the figures Coles announced "appear to be in line with what the SDA audit is discovering".
Mr Cain said the company was relying on the advice received by auditors, and the $20 million figure "covers what we know today".
"It's the best number to take for the time being," he said.
James Cook, chief investment officer at ethical investment house U Ethical, one of Coles' top thirty shareholders, said he was disappointed with Coles' level of disclosure around the underpayments issue, noting there "wasn't a lot of clarity" for investors following the announcement this morning.
"We're still asking a lot of questions ourselves. We'd certainly like to see a clear statement from the company," he said.
"We would also expect increasing moves from Coles to recognise their social mandate to do the right thing."
Fair Work Ombudsman Sandra Parker said her office would investigate Coles, and criticised the retailer for only telling the watchdog on Tuesday morning.
"Yet another large, listed Australian company has underpaid employees millions of dollars, and in this case they chose to inform us only moments before their financial results announcement," she said.
As recently as Monday afternoon, a spokesman for Coles had told media it had "no update" on its underpayment audit.
Coles managers received notice last week saying the company had "identified inconsistencies in clocking [on] patterns and salaried team member ways of working". The notice also reinforced store managers should not be working more than their specified hours per week.
The spokesman told The Age and The Sydney Morning Herald on Monday the notice was part of the company's regular "roster reset process".
Coles joins a number of other high-profile retailers who have been found to underpay staff in recent times, which include Super Retail Group, Michael Hill Jewellers, Domino's and Bunnings.
Other retailers also undertaking reviews following Woolworths' mammoth underpayment include IGA supplier Metcash and upmarket department store David Jones.
A Metcash spokesperson said no "material underpayments" had yet been identified. David Jones said its audit was continuing.