Woolworths to pay workers another $50 million to make up for underpayments

Groceries giant Woolworths will compensate salaried staff who were likely underpaid in the early 2010s with a flat $2500 each plus superannuation because the wage problems happened so long ago it no longer has timesheets to see how much individual employees should get.

The payments to about 20,000 people are expected to total $50 million and exceed the six years employers are required to backpay staff under industrial laws, which in Woolworths’ case is 2013 to 2019.

Woolworths chief executive Brad Banducci said the company had worked through records as quickly as possible. Credit: Dallas Kilpnonen/Woolworths

Woolworths has already backpaid a record $370 million and the company faces litigation from the Fair Work Ombudsman which suggests, based on a sample of employees, the true bill could be more than double that, though Woolworths disagrees.

On Friday Woolworths revealed it had dealt with a further threat in the form of a class action brought by Canberra firm Adero Law on behalf of salaried Woolworths managers in stores, which both sides have agreed to settle.

Woolworths will cover class action members’ legal costs of an undisclosed amount and Adero principal Rory Markham said the claimants would, or had, been paid 90 per cent of what they are owed and would receive more if the Fair Work Ombudsman’s action is successful.

Woolworths Chief executive Brad Banducci said the supermarket chain had been committed to fixing the underpayments since they were uncovered in 2019.

“We’ve worked through hundreds of millions of records as quickly as we can to ensure former and current team members have been paid what they were entitled to, plus interest and superannuation,” he said.

Staff who worked at Woolworths supermarkets, Metro stores, Dan Murphys, BWS and Big W for at least six months from January 1, 2010 to September 2013 will be entitled to the new payment.

The Shop, Distributive and Allied Employees Association, which is the largest union representing retail staff, welcomed Woolworths’ plan.

“Woolworths has done the right thing given that their records were deficient,” SDA boss Gerard Dwyer said, adding it showed all companies should test their payroll systems to ensure staff were being paid the correct amount.

Woolworths’ underpayments were largely the product of salaried staff being paid an annual salary that was intended to be high enough to cover things like the overtime and penalty rates they would have been owed under the industry award had they totalled up their actual working time.

However, the salaries were in some cases substantially too low, leading to the mass underpayments.

Josh Cullinan, secretary of the smaller and more activist Retail and Fast Food Workers Union, said Woolworths’ decision was disappointing because the company’s underpayment bill over the six-year period suggested it had underpaid staff much more than $50 million between 2010 and 2013.

“The underpayments in that period are going to be catastrophically more than $2500 for very many, many workers,” Mr Cullinan said.

“These workers were promised in 2019 they would be paid back to 2010. It’s not good enough for Woolworths to come and say they don’t have enough records. Some of these workers waiting patiently will be owed tens and tens of thousands in those three years in underpayments.”

In a statement to the stock exchange, Mr Banducci stood by Woolworths’ commitment to look beyond its legal obligations back to 2010.

“With detailed analysis challenging in the earlier years, we felt an equal and broad-based payment to all potentially impacted team members was a fair and equitable way to approach remediation for this period,” Mr Banducci said.

Woolworths shares finished Friday’s session up 0.6 per cent.

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