Coles and Woolworths combined expect to pay up to $1 billion in remediation related to the General Retail Industry Award (GRIA), following a ruling made by the Federal Court last week.
The payments will be made on top of the compensation the supermarket giants have already paid as part of their reviews over the past years.
Last week, Justice Nye Perram released an 82,000-word judgment ruling that both companies had failed to keep accurate employment records.
The Fair Work Ombudsman (FWO) commenced proceedings in December 2021, alleging the companies underpaid their salaried managers in breach of the GRIA and the Fair Work Act.
In an update to shareholders, Coles estimated a further remediation of $150-$250 million (including interest and on-costs) to reflect the findings of the court. The range was based on the underpayments alleged by the FWO relating to historical work patterns.
The grocer has already paid $31 million since it conducted a review into the pay arrangements of all team members that the GRIA covered in early 2020.
“As previously stated, the judgment in the proceedings is complex,” Coles said in the statement. “A number of issues regarding the interpretation of the GRIA remain outstanding and will require further court hearings to determine.”
In a separate statement, Woolworths expects the one-off additional impact of the court’s findings to be in the range of $180-$330 million post tax ($250-$470 million pre tax). Another $140-$200 million post tax ($200-$280 million pre tax) in interest, superannuation and payroll tax could also add to the net liability once the final remediation is determined.
“This is a very preliminary estimate with significant uncertainty, and is based on a historical analysis of clocked time and attendance records. Further detailed review and modelling of team member records and consideration of the court’s decision [are] required to determine the full financial impact,” the group said.
Woolworths also noted it had already undertaken an “extensive remediation” for its affected salaried store leaders prior to the court’s ruling.
According to the Federal Court, a case management hearing will be held next month to determine the next steps in the process, including compensation for the affected 27,700 employees and any fines leviable on the two grocery giants.
