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Woolworths stares down class action over payroll bungle

Woolworths

“Underpayments disclosed by Woolworths to date substantially understate the wages owed,” a law firm has said with the launch of a class action against the retail giant.

In late October, Woolworths revealed that it had discovered payroll errors for around 5,700 of its employees dating as far back as 2010, with its initial estimate being a backpay bill over between $200 million and $300 million.

However, the ASX-listed retailer has since been accused of playing down the true extent of underpayments to its workforce.

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Legal firm Adero Law announced on Friday (29 November) that it had filed a class action against Woolworths, which it said was “on behalf of Mr Cameron Baker and approximately 7,000 other current or former salaried employees of Woolworths Supermarkets”.

Mr Baker, the firm said, is a former stock replenishment team manager at Woolworths Camberwell, and one of a “handful” of employees who spoke up about the underpayments.

“Woolworths is reported to have commenced their internal review in February this year ‘when a handful of managers questioned why they were paid less than the [less experienced] employees they were managing’. Mr Cameron Baker, a former Replenishment Team Manager at Woolworths Camberwell, was one of those handful who spoke up,” Adero said.

“Despite receiving a $12,000 increase to his annual salary, Mr Baker did not receive any backpay for his previous five years of employment or an accurate account of underpayments. Mr Baker engaged the services of an industrial agent to perform a wage audit, which revealed that Mr Baker is being underpaid at least $20,000 per year given the numerous loadings, penalties and allowances that attach to overtime, and work performed on night shifts (9pm until 6am), weekends and public holidays.”

Class action claims ‘systemic’ breaches of workplace laws

The action claims that affected workers are the victims of “systemic wage theft” and that the underpayments occurred “on a far greater scale than the retail giant has disclosed”.

“The quantum of underpayment on a per-worker, per-year basis has been reported by Woolworths as $5,200,” Adero said in a statement on its website.

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“[However,] based on 12 months of due diligence investigations, Adero considers that the underpayments disclosed by Woolworths to date substantially understate the wages owed, which Adero estimates at $620 million.”

According to the law firm, this discrepancy — more than double Woolworths’ own estimate — is due in part to “errors in the principles that are applied within the Woolworths self-audit”.

Yet Adero also asserted that Woolworths had been non-compliant with employer record-keeping obligations.

“Woolworths, in many instances, failed to keep accurate time and attendance records as required by the Fair Work Act 2009 which hinders the identification of overtime hours worked,” it said.

Adero is actively seeking the experience of other current and former employees at Woolworths Supermarkets who worked for the retailer at any point since 29 November 2013 in “a salaried management or supervisory position” to consider joining the no-win, no-fee class action.

In a subsequent media call on Monday regarding the class action, Adero said that it “understands many Woolworths stores maintain inaccurate records of hours worked by employees”, with particular reference to unrostered overtime, and that these unpaid hours “are readily disregarded in employer self-audits because of the inadequate record keeping”.

The law firm also lashed out at Woolworths for conducting the audit internally, which it said is “without scrutiny from an independent umpire”.

Woolworths sticks to original estimate

In a statement to the ASX on Monday (2 December), Woolworths said that it had been notified of the employee class action in the Federal Court, and repeated its previous estimate that remediation of the payroll error would be “in the range of $200 million to $300 million”.

“On 30 October 2019, Woolworths Group committed to fully rectify all payment shortfalls to current and former salaried team members across the Group, including interest and superannuation contributions, as soon as possible,” it said.

“In keeping with that commitment, Woolworths Group continues to work towards making interim payments (including superannuation contributions and interest) before Christmas, to affected current and former salaried Supermarkets and Metro store team members for the two years reviewed to date (September 2017 to August 2019).”

Woolworths said it will “fully defend” the class action, stating that the retailer “believes the class action proceedings are without merit”.

“As stated in its 30 October announcement, Woolworths estimates that the one-off impact for remediation is expected to be in the range of $200–$300 million (before tax). An update will be provided at the Group’s half-year 2020 results in February,” it said.

Adam Zuchetti

Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at This email address is being protected from spambots. You need JavaScript enabled to view it.

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