Woolworths faces big fine and $300m backpay bill

Australia’s worker underpayment bill has soared past $500m with Woolworths facing significant ­financial penalties.

Woolworths CEO Brad Banducci. Picture: Adam Yip

Australia’s worker underpayment bill has soared past $500m, with supermarket giant Woolworths facing significant ­financial penalties after admitting almost 6000 employees had been underpaid up to $300m over nine years.

Woolworths conceded the number of underpaid workers would increase and employees would not be fully backpaid for at least another eight months as its investigation into the record underpayment would not be completed until June next year.

Fair Work Ombudsman Sandra Parker attacked Woolworths for its “completely unacceptable” lack of transparency, and would not rule out court action on top of seeking a significant “contrition payment” for breaching workplace laws on a “massive scale”.

Woolworths chief executive Brad Banducci and senior executives are likely to lose their full year’s bonus over the revelations that will also affect workers at Big W, Dan Murphy’s, BWS and its supermarket employees.

The probe is looking into how 5700 out of 11,000 supermarket staff on annualised salaries were underpaid up to $300m, the nation’s biggest underpayment on record. Interim backpayments will be made to staff before Christmas to rectify two years of underpayments between September 2017 and August this year. But the under­payments to annualised salaried staff have been occurring since 2010, and seven years of employee pay records are yet to be analysed. Woolworths said more than 11 million individual employee records per year would be reviewed.

“Retrieving and reviewing individual rostering, time and attendance, and payroll data across all businesses is expected to take at least until the end of the financial year,” the company said.

Further interim payments beyond the pre-Christmas payment will be made to employees as each respective year of the review was completed. The underpaid supermarket employees were paid an average annualised salary of $73,000 but the yearly pay was not enough to cover the overtime, penalty rates and allowances they were legally entitled to receive under the retail award.

Most of these workers are department managers at a store level who are on non-union annualised salary arrangements. The company said a further 145,000 employees on a union-negotiated enterprise agreement were not affected. Analysis is yet to be done of the pay of 8000 workers at Big W, Dan Murphy’s and BWS but their anticipated underpayments is included in the $200m-$300m estimate.

The Shop Distributive and Allied Employees Association rejected employer claims blaming complex awards, saying the union had been concerned about salary settings for salaried staff in the retail industry for some time.

“Whilst Woolworths has committed to rectifying these salary staff underpayments back to 2010, the SDA now calls on all retailers to audit their payroll settings especially for salary staff,” it said. “Salaried staff are not ‘award-free’ and their salary must exceed what they would have been paid if they were working under the award.”

Attorney-General Christian Porter said while Woolworths appeared to have self-reported the apparent breaches as soon as they were identified and vowed to repay affected staff as quickly as possible, employers had a strict obligation to ensure workers receive their full wages and entitlements and there were no valid reasons for failing to meet their legal obligations.”