Woolworths owes supermarket staff up to $300 million in backpay

Woolworths underpaid its employees by as much as $300 million over almost a decade, only discovering it had been keeping the cash when shocked store managers complained they were earning less than their staff.

Woolies on Wednesday said it learned it had underpaid 5700 salaried staff over nine years when a handful of managers noticed a difference between their pay packets and those covered by a newly negotiated enterprise agreement for supermarkets and Metro stores.

That agreement, implemented in February, set in motion a review during March and April that Woolworths said uncovered the long-running breach.

It did not tell the Fair Work Ombudsman until August and reportedly only revealed the full scale of the shortfall on Wednesday, when it said it had analysed two years of accounts but that the issue could date back to 2010.

It expects returning the cash plus interest to staff will result in a one-off remediation charge of between $200 million and $300 million in February’s first-half results.

Group chief executive Brad Banducci said Woolworths also expects to make a contrition payment.

“As a business we pride ourselves on putting our team first, and in this case we have let them down,” Mr Banducci said.

“We unreservedly apologise.”

The company will extend the review to all its Australian businesses, which include Big W department stores and Dan Murphys and BWS liquor.

Mr Banducci, who took charge of Woolworths in February 2016 after leading the food division for a year, said he expected to forfeit his bonuses but would not be drawn on his future.

The Fair Work Ombudsman, which will carry out its own investigation on the matter, said it was disappointed to add Woolworths to a growing list of public companies involved in wage underpayments.

Other recent examples have included Wesfarmers, Qantas, Commonwealth Bank, Super Retail Group and Michael Hill Jewellers.

Super Retail Group chief executive Peter Birtles brought his retirement forward by a month earlier this year after the retailer was hit by an underpayment scandal that cost it $43 million.

“(We are) shocked that yet another large, publicly listed company has today admitted to breaching Australia’s workplace laws on a massive scale,” Fair Work Ombudsman Sandra Parker said in a release.

“It is particularly concerning that many of these corporates have enterprise agreements in place that they negotiated but then failed to properly uphold the minimum standards.”

Woolworths said interim back payments covering the data analysed so far will be made before Christmas.

It said the majority of the staff affected are current and former salaried department managers at store level, with none of the 145,000 people covered by an enterprise agreement affected.

The announcement overshadowed the release of Woolies’ first-quarter sales growth that, driven by the success of its Lion King Ooshies and Discovery Garden checkout giveaways, comfortably beat that announced on Tuesday by fierce rival Coles.

Comparable sales at Woolworths’ supermarkets rose 6.6 per cent on the same period a year ago, easily trumping the 0.1 per cent from Coles.

Shares in Woolies slipped 1.1 per cent to $37.32 by 10.45am, but were still up 27.5 per cent this calendar year.

The company said retrieving and reviewing rostering, time and attendance, and payroll data across all businesses is expected to take at least until October 30 to complete.

Repayments will be made as soon as each respective year of the review is completed.

Woolies entered into a new compliance partnership with Fair Work last year after it was discovered that three cleaning companies and a former sole trader were underpaying South Korean cleaners at Woolworths’ sites in Tasmania.

In 2014, Fair Work took legal action against two sub-contractors operating at several Coles sites for underpaying 10 trolley collectors more than $200,000.

AAP