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FWO takes Coles to court over alleged $115m in underpayments

The Fair Work Ombudsman has commenced legal action against supermarket Coles, alleging it underpaid thousands of salaried employees by a total of $115 million since 2017.

Coles disclosed to the ASX and FWO last year that it was reviewing the pay of some of its workers, and was setting aside $20 million to backpay the 600 workers involved – less than 1 per cent of its total team members, according to CEO Steven Cain.

Now, the FWO alleges the business had actually failed to pay 7,812 workers enough to cover their minimum lawful entitlements, given they performed “significant” amounts of overtime, and were often underpaid for work on weekends and public holidays.

The individual underpayments range from small amounts up to $471,000, with 45 of them allegedly underpaid by more than $100,000.

“Businesses paying annual salaries cannot take a ‘set-and-forget’ approach to paying their workers,” said FWO Sandra Parker.

“Employers must ensure wages being paid are sufficient to cover all minimum lawful entitlements for the hours their employees are actually working and the work they are actually doing.”

The FWO is seeking penalties against Coles for failing to pay its staff properly, and a court order requiring them to backpay effected workers with interest. According to the FWO, each breach could cost Coles up to $63,000.

Even taking into account the alleged 7,812 underpaid workers, Coles’ figure still falls well short of supermarket rival Woolworth’s $300 million underpayment which dated back as far as 2010.

Coles said in a statement to investors it has, to date, incurred $13 million in remediation costs, and has recently provisioned a further $12 million.

“Coles is currently reviewing the proceedings,” the business said, “which includes issues relating to the interpretation and application of various provisions of the [General Retail Industry Award] and to the extent that further remediation may be required.

“We will update the market accordingly.”

Underpayments remain rife in retail

SDA national secretary Gerard Dwyer said too many companies are getting their payroll responsibilities wrong, and that underpayments remain rife in the retail industry.

“This wouldn’t have happened had companies paid greater attention to their rostering and payroll systems, and to the awards they are legally responsible for applying, to ensure their employers get the pay to which they are entitled,” Dwyer said.

However, according to the SDA, many retailers are not inclined to do the the right thing by their workers and search for underpayments.

“The SDA asked dozens on companies to conduct audits. Two years later, many have yet to respond and deficient industrial laws allow them to proceed unchallenged,” said Dwyer.

“The [FWO] says the Coles action is a ‘warning to all employers that they can face serious consequences’, but can the FWO really deliver? [Coles] is a company that has self-reported, while hundreds of other companies have turned a blind eye to underpayments, knowing their likelihood of getting caught is next to zero.

“The SDA calls on the FWO to investigate the many other retail employers systematically underpaying their workers, and if it does not have the resources to do so, demand that the Morrison Government do the right thing by Australian workers and restore the right of industry unions to conduct spot book checks.”

According to Dwyer, wage theft was not an issue when these rights existed as unions could ensure responsible employers were not being undercut, and vulnerable workers were not being ripped off.

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