Woolworths settles a class-action lawsuit over unpaid staff wages

Woolworths has settled a class action linked to more than $390m in unpaid wages to staff and will pay out 20,000 staff members.

Woolworths CEO Brad Banducci apologised for the staff underpayment when it was discovered in 2019 and gave up millions of dollars in bonuses because of the scandal. (AAP Image/Bianca De Marchi)

Woolworths has paid $50m to provisionally settle a class action linked to hundreds of millions in staff underpayments, two years after it was launched.

The supermarkets giant on Friday said it had provisionally settled the class action proceedings commenced in late 2019 in relation to its remediation of salaried team members covered by the General Retail Industry Award (GRIA), on the basis that the proceedings be discontinued.

In 2019 Woolworths revealed it had discovered the underpayment to its staff, as a string of other retailers were also revealing their own unpaid wages.

The supermarkets giant estimated that as much as $390m in wages had not been paid to staff members over a number of years.

Woolworths on Friday also announced it has taken another step in its salaried team member remediation program, with an ex-gratia payment of $2,500 plus superannuation to be paid before Christmas to around 20,000 current and former GRIA-covered salaried store team members. The total payment is expected to be around $50m, and covers the period beyond the legal limitation period (January 2010 to September 2013).

Woolworths had been defending class action proceedings commenced in November 2019 in relation to its remediation of GRIA-covered salaried team members. Class members comprise former and current team members represented by Adero Law.

Woolworths has now provisionally settled the salaried team member class action proceedings. This is on the basis that the class action will be discontinued, any class member entitlement to further compensation, if any, over the period commencing November 2013 will be determined based on the court’s determination of the legal principles in the Fair Work Ombudsman (FWO) proceedings commenced in June 2021 and the settlement of the class action will be subject to court approval.

Woolworths reported in its 2021 accounts that it had paid $370m in remediation inclusive of superannuation and interest payments to team members in supermarkets, Metro, Big W, Dan Murphy’s and BWS.

“We’re pleased to have settled the class action proceedings. This will ensure that our approach to full remediation can be appropriately addressed through the FWO proceedings,” said Woolworths CEO Brad Banducci.

“Since we discovered this issue in 2019, we’ve made it our priority to do the right thing for our team members. 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.”

In late 2019 Woolworths CEO Mr Banducci became the latest high profile chief executive to give up his short-term bonus in the wake of the wages scandal.

In a statement to the ASX in November 2019, Mr Banducci and Woolworths chair Gordon Cairns “acknowledged their leadership responsibility” for the issues that saw thousands of Woolworths staff underpaid.

Forgoing his bonus potentially costs Mr Banducci millions of dollars.

“I have made the personal decision to forgo my 2020 financial year short-term bonus because I believe it is the right thing for me to do as CEO,” Mr Banducci said in 2019 statement.

Mr Banducci’s target short-term bonus for the 2020 financial year was $2.6m, Woolworths said at the time.