We have all heard about recent Federal Court case involving Coles and Woolworths center’s highlighted the underpayment of thousands of supermarket managers and may cost the companies more than $1 billion in repayments and penalties.<\/p>\n
OH NO…Not Again…<\/strong><\/p>\n Apparently its all a new precedent and set to sufficiently change the IR landscape. Far from \u201cnew\u201d but it serves as a warning to wake up the people who are responsible for this and similar types of occurrences.<\/p>\n The judgment found that both brands failed to keep accurate wage records and improperly managed contractual arrangements around overtime, penalties, and allowances, violating the Fair Work Act and the General Retail Industry Award.<\/p>\n Background of the Case<\/strong><\/p>\n Claims of underpayment affected nearly 30,000 employees, many of whom were salaried managers working beyond their rostered hours without receiving appropriate overtime or penalty rates. The case was brought by the Fair Work Ombudsman and through class actions filed by Adero Law, highlighting systemic issues in the supermarkets\u2019 pay practices stretching back to 2013.<\/p>\n Key Legal Issues:<\/strong><\/p>\n A major issue was the use of \u201cset-off\u201d provisions, where higher base salaries were intended to cover all award entitlements; however, the court found these arrangements do not justify failing to pay overtime, penalty rates, and allowances as they arise in each pay period.<\/p>\n The law requires these entitlements to be paid weekly or fortnightly, not retrospectively offset by a previously higher salary. But this is nothing new. Otherwise, what would happen if an employee did 12 x 55-hour weeks in a row then leaves the Company. Does the Company normally just turn a blind eye on the excessive overtime (204 hours) that was worked up to termination (because it was going to be averaged out annually and later right???) and the employee leaves the business being totally underpaid??? Well\u2026if that\u2019s a standard practice in the past for BIG business – then sure surprised me !!!<\/p>\n Findings and Court Rulings<\/strong><\/p>\n Justice Nye Perram ruled both Coles and Woolworths did not comply with their obligations to properly record hours worked and fairly compensate overtime and penalty allowances. The court declined to award specific compensation yet citing the complexity and inadequate connection between legal issues and factual evidence, but remediation payments have already been made in the vicinity of around $31 million by Coles and $330 million by Woolworths and, with a whole lot more to come.<\/p>\n Reiterating Implications<\/strong><\/p>\n This case reminds employers to keep detailed payroll records and pay award entitlements in the correct pay cycle. Again, nothing new. Has businesses not been keeping such record for 7 years or now minimum 5 years. I mean…who\u2019s idea was it to throw out all the payroll records???<\/p>\n The Ruling<\/strong><\/p>\n The ruling is not really forcing major changes but reminding us of all of the long history that seems to have recently been forgotten, eroded and\/or short cut. More specifically there are only really 3 likely causes:<\/p>\n Next Steps:<\/strong><\/p>\n The case continues, with a case management hearing scheduled for October 27, to determine the process for compensation and any final orders for affected employees. Both Coles and Woolworths have apologized and implemented new payroll safeguards, vowing not to repeat these errors.<\/p>\n This again reiterates the legal, financial, and operational consequences now facing Coles, Woolworths, and Australian employers following the Federal Court\u2019s findings on systemic wage underpayment and flawed pay structures.<\/p>\n <\/p>\n As Always:<\/strong><\/p>\n <\/p>\n Paul Marshall<\/p>\n Partner | HR Chief | FCPHR<\/strong><\/p>\n Author of:<\/p>\n\n
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