Woolies underpaid wages bill blows out to almost $500m

The size of Woolworths’ underpaid wages bill has doubled since the retailer first announced it had unearthed missing payments.

Woolworths CEO Brad Banducci. Picture: AAP

The size of Woolworths’ underpaid wages bill has doubled since the retailer first announced last year it had unearthed missing payments to staff and is quickly racing to $500m, making it the biggest wages scandal in recent history.

Although the supermarket giant is not alone in admitting it hadn’t paid its workers their full entitlements — with other retailers such as Michael Hill, Coles, Target, Super Retail as well as the taxpayer-funded broadcaster ABC recently making similar confessions — the wages and interest bill now racking up at Woolworths dwarfs all others.

It was only eight months ago that Woolworths revealed it had underpaid between $200m and $300m to as many as 5700 staff at Big W, Dan Murphy’s and BWS, as well as at its supermarket businesses.

Earlier this year there were more confessions from Woolworths when it announced that the wages bill would need to be adjusted higher to $315m and on top of that there would be an interest and other costs bill of $80m.

On Tuesday there was more bad news on the wages front when chief executive Brad Banducci revealed Woolworths would now face a wages bill of $390m plus an interest and costs bill of another $110m, taking the wages remediation tally to just on half a billion dollars.

Woolworths said in a broader trading update it had repaid $80m in staff wages in the first half, but this would blow out to another $105m in the second half as new cases of unpaid wages were discovered.

Woolworths said as part of the wages review, began last year when the first instance of unpaid wages was discovered, that payment shortfalls have been identified for salaried staff in its ALH Hotels business, for staff employed under the Hospitality Industry General Award (HIGA).

The review found salaried staff were not paid in full compliance with the award, based on an analysis of 2018 and 2019 time and attendance data.

To put the size of the $500bn Woolworths wages scandal context, other retailers to admit to lost wages include Michael Hill ($25m), Coles ($20m) and Target ($9m).

At Woolworths first-half results in February, Bank of America Merrill Lynch analyst David Errington peppered the CEO about the growing size of the unpaid wages bill, saying the hundreds of millions of dollars in missed wages had actually acted to falsely inflate Woolworths profits through those years and asked if bonuses and retirement benefits of current and former executives could be clawed back.

On Tuesday Mr Banducci said Woolworths had analysed 4½ years of wages history across the group that is subject to the general retail industry award. It is now extending that forensic investigation to other parts of the business, such as the hotels staff.

“We have been very forensic, we have done a lot of analysis … this our revised estimate and we hope it is certainly the last one,’’ Mr Banducci said.