Woolworths Group handed $1.2m fine after ‘widespread’ long service leave error

Australia’s largest supermarket chain has copped a huge penalty after a “systematic failure” to pay employees their correct entitlements.

Australia’s largest supermarket chain has been slapped with a $1.2m fine after failing to pay Victorian employees their correct long service leave entitlements.

Woolworths Group Limited and its subsidiary Woolstar Pty Limited returned before the Melbourne Magistrates’ Court on Friday morning after pleading guilty to a combined 1227 charges of breaching the Long Service Leave Act.

The court was told the company had made a “human error” when updating its payroll systems over an 18-month period beginning in 2014.

Woolworths self-reported the issue to the regulator, Wage Inspectorate Victoria, in 2020 after an internal review flagged the problem.

The inspectorate launched charges in August last year following its own investigation, which found underpayments to thousands of current and former staff between November 2018 and January 2023.

The court was told 1227 former employees were underpaid between $250 and $12,000, with a decision made not to lay charges for about 3500 staff underpaid less than $250.

In court, Woolworths argued it has been a model accused, suggesting a combined $250,000 fine was appropriate. Picture: NCA NewsWire / Roy VanDerVegt

In total, employees were underpaid more than $1m.

Fining Woolworths $1.207m and Woolstar $36,000, magistrate Nahrain Warda said balancing the serious offending and the proactive steps taken by Woolworths was a difficult endeavour.

“The sentence must ensure a strong message is sent that the court regards the protection of the entitlements of employees, where there is a significant power imbalance, is paramount,” she said.

Ms Warda described the offending as a “systematic and widespread” failure, noting Australia’s largest retailer has an obligation to ensure compliance with the law in each state and territory.

“It’s expected they would and should have infallible systems in place,” she said.

“This is a gross failure on their part to ensure irregularities do not exist.”

Woolworths chief executive Bradford Banducci was threatened with jail time during a senate inquiry. Picture: NCA NewsWire / Martin Ollman

Ms Warda noted the theoretical maximum penalty for the charges was more than $10bn but said the chain had co-operated at every stage of the process.

She said Woolworths had apologised to the affected employees, put a process in place to pay them back with interest and pleaded guilty at the earliest opportunity.

No conviction was recorded.

The case comes a week after outgoing Woolworths chief executive Brad Banducci was threatened with jail time after refusing to answer questions about the company’s profitability during a senate inquiry.

Originally published as Woolworths Group handed $1.2m fine after ‘widespread’ long service leave error