The Fair Work Ombudsman (FWO) has commenced legal action in the Federal Court against Woolworths Group Limited and Woolworths (South Australia), in relation to major underpayments of salaried managers.
Australia’s largest supermarket chain disclosed to the FWO and the Australian Securities Exchange in 2019 that it had underpaid thousands of salaried employees in its supermarkets and Metro stores of more than $390 million.
The regulator then investigated the underpayments of the managers and assessed the records of a sample of 70 in-store salaried managers for their work between March 2018 and March 2019.
The FWO alleges that Woolworths Group Limited underpaid those 70 employees a total of $1,172,282 during this period. Despite back-payments, the FWO alleges that a total of $713,395 of underpayments remains outstanding to these employees.
The FWO is seeking court orders for Woolworths Group Limited to rectify the total outstanding underpayments in relation to the 70 managers whose records were assessed – and for both companies to then apply those calculation methods to rectify any underpayments owed to all other affected salaried managers, plus interest and superannuation.
Woolworths Group says that it has engaged with the FWO on these issues and welcomes the opportunity to have the Federal Court clarify the complex legal issues involved, including the interpretation and application of provisions of the General Retail Industry Award.
The supermarket giant has been working to review and remediate the issue since 2019 and says that to date more than $370m has been paid to current and former salaried team members, with work continuing to remediate affected team members.
Brad Banducci, CEO, Woolworths Group, says: “Since 2019 our highest priority has been, and continues to be, addressing the issue of underpayments for our team, and to ensure that it doesn’t happen again.
“We welcome the opportunity for further clarity from the court process on the correct interpretations of the relevant provisions.”
Fair Work Ombudsman Sandra Parker said that addressing allegations of non-compliance in the corporate sector and ensuring remediation programs were being undertaken correctly was a priority.
“We allege that Woolworths failed to ensure that annual salaries were sufficient when compared to the actual hours worked, leaving their salaried managers significantly underpaid. We also allege that significant underpayments have not been fully back paid, and we will seek court orders for Woolworths to recalculate and rectify all underpayments for all affected employees.”
The FWO alleges the two companies’ annual salary arrangements did not cover employee entitlements for various overtime rates, weekend and public holiday penalty rates, meal allowances and annual leave loading owed under the General Retail Industry Award 2010, given actual hours worked.
The most significant alleged underpayments related to Woolworths’ failure to pay the correct overtime entitlements to these salaried managers.
The FWO alleges that the underpayments for the 70 managers range from $289 to $85,905 during the one-year timeframe. They were all full-time employees, engaged as team support, team managers or duty managers, and based primarily in Sydney, Melbourne, or Brisbane.
In total, there were about 19,000 salaried managers employed by the two Woolworths companies between June 2015 and September 2019, which included full-time and part-time employees from every state and territory.
The FWO also alleges that Woolworths Group Limited and Woolworths (South Australia) failed to make or keep records which specified the number of overtime hours worked by the salaried managers or that detailed the loadings, penalty rates or monetary allowances applicable to the hours worked by the salaried managers.
The FWO is seeking orders for penalties against Woolworths Group Limited and Woolworths (South Australia). A directions hearing in the Federal Court in Sydney is still to be scheduled.