Coles faces probe on underpayments, $20m bill

Fair Work Ombudsman accuses Coles of breaching workplace laws after workers were underpaid $15m over six years.

Coles has apologised for the underpayments. Picture: AAP

Fair Work Ombudsman Sandra Parker has accused Coles of failing its employees and breaching workplace laws after the company revealed workers had been underpaid $15 million in wages over six years.

Ms Parker said the agency would conduct an investigation into the underpayments, which impact 500 to 600 salaried workers from Coles’ liquor and supermarket businesses.

“The Fair Work Ombudsman is disappointed to see Coles Group announce this morning that it has breached the Fair Work Act for several years and underpaid workers over $15 million,” Ms Parker said.

“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.”

Coles earlier apologised and said it faced a $20m bill after becoming the latest big firm to announce it had underpaid its staff.

It follows underpayments by companies including Woolworths, Bunnings, the Commonwealth Bank and Super Retail Group.

In an announcement as it handed down its half-year result, Coles is setting aside $20m for six years of wages to remediate the underpayment issue.

The Shop, Distributive and Allied Employees Association estimated 500 to 600 former and current Coles employees had been underpaid.

Coles said it will cost it $3m, plus $1m in interest and costs, to repay workers in its liquor arm, while in its supermarkets business a provision has been made for $12m in unpaid wages, as well as $4m in interest and costs.

“Over recent months, various Australian companies have announced reviews of their remuneration frameworks for salaried employees,” Coles said in a statement.

“Coles has been conducting its own review of award covered salaried team members, which is ongoing,” Coles said.

“This review does not relate to team members who are remunerated in accordance with approved enterprise agreements and who comprise over 90 per cent of our workforce.”

Coles said it has identified that for less than 1 per cent of its total team members there are some differences between their remuneration and the general retail industry award (GRIA).

“The review of our award covered salaried team members in our liquor business is nearing completion. For approximately 5 per cent of salaried liquor managers there is a salary difference relative to the GRIA.”

A review of supermarkets was continuing.

“The review of our award covered salaried managers in our supermarkets business is still in progress,” Coles said. “At this stage, for approximately five per cent of our salaried supermarkets managers there is a salary difference relative to the GRIA.

“Coles has taken a provision of $12 million for estimated related payments in supermarkets over the last six years, and a further provision of approximately $4 million for interest and on costs.”

Coles Group CEO Steven Cain said: “We aim to make Coles a great place to work, and apologise to those team members who have been unintentionally affected.

“We are working at pace with a team of external experts to finalise our review. 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.”

A string of companies have been caught out over the last year underpaying staff, with Woolworths the biggest underpayer, admitting to underpaying as much as $300m to staff which it is now paying back.

Ms Parker said Coles Group “joins the growing list of major corporates who have failed their employees by withholding their lawful entitlements when they should have measures in place to ensure that they do not”.

“I am calling on boards to seek assurance from their chief executive Officers that wages are being paid to employees in accordance with the law. The buck ultimately stops with the chair,” she said.

“The Fair Work Ombudsman will be conducting an investigation into Coles Group.”

SDA national secretary Gerard Dwyer said the underpayments had been uncovered as part of an industry-wide audit initiated by the union last November..

”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,” he 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.”