The Fair Work Ombudsman today announced it has commenced legal action against supermarket giant Woolworths in regards to “major underpayments” of a number of its salaried managers.
According to the FWO, Woolies underpaid 70 employees a total of $1.17 million between March 2018 and 2019, and that it has failed to repay the total sum despite having made back-payments.
The issue stems from Woolies’ annual salary arrangements not covering certain entitlements, such as overtime, weekend and public holiday rates, meal allowances and annual leave loading owed.
“We will seek court order for Woolworths to recalculate and rectify all underpayments for all affected employees,” FWO Sandra Parker said.
“This court action highlights that large employers face serious consequences if they do not prioritise workplace law compliance among other aspects of their business.”
Another issue is that Woolworths “failed to make or keep records” relating to hours worked in overtime by salaried managers, or that detailed the loadings or penalty rates which would be applicable.
Is a complex wage system to blame?
Woolworths said it is currently reviewing the proceedings put forward and that it welcomes the opportunity to have the Court clarify the complex legal issues involved, “including the interpretation and application of provisions of the General Retail Industry Award” – an issue it put forward in October 2019 when it first announced the underpayments.
In an opinion penned in November of 2019, just a month after Woolies’ initial self disclosure, RMIT professor of workplace law Anthony Forsyth argued that the excuse doesn’t stack up.
“The central problem is that, despite all the talk of how much ‘we pride ourselves on putting our team first’, the need to ensure staff are paid what they are owed apparently just didn’t rate highly enough,” Forsyth said.
“Woolworths, for example, encompasses a thousand supermarkets and about 30 million customer transactions a week. The logistics of procurement, distribution and storage are immense. Imagine what it takes to keep track of use-by dates to comply with food safety regulations.
“If Woolworths can do that, it’s hard to believe, with all the lawyers, accountants and professional advisers at its disposal, it couldn’t ensure it complied with industrial relations laws.”
The supermarket business initially revealed the underpayment in October 2019, where it noted the total amount underpaid landed at an eyewatering $300 million – a figure which later ballooned to $390 million.
At the time, Parker said it was concerning that Woolworths had been unable to properly uphold the minimum standards of its agreements, and that it was “simply not good enough”.
“Companies and their Boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including court enforceable undertakings and litigation where appropriate,” Parker added.