Woolies pay issue widens

Review shows bigger scope of underpayment

WOOLWORTHS’ staff underpayments have jumped to $315 million across a larger number of employees than initially thought, with the figure potentially rising further once a review into the nine-year scandal is complete.

The supermarket giant – which also owns Big W – yesterday said it would exceed its initial guess of $200 million to $300 million in salaried staff underpayments across 5700 team members, with 7000 staff now believed to be affected after reviewing five years of data.

The previous estimate was based on two years of information. The underpayments issue also weighed on Woolies’ first-half profit, which slipped 7.7 per cent to $887 million despite a 6.0 per cent increase in total revenue to $32.41 billion.

Chief executive Brad Banducci ( pictured) said he hoped the underpayment estimates would not change further but could not rule out any future underpayment issues.

“Never say never – (but) we do feel we’ve put a robust process in place,” Mr Banducci said.

Yesterday’s update came after Woolworths told investors in December it expected the bill for the wages underpayment to come in at the lower end of the $200 million$300 million range first flagged in October.

The company discovered it had been keeping the cash when some shocked store managers complained in early 2019 they were earning less than their staff. Woolworths started a review but didn’t tell the Fair Work Ombudsman about the issue until August.

The company yesterday said it had repaid about $78 million to staff, including $69 million during FY20.

Woolies’ rival Coles last week also owned up to underpaying staff, with the company expecting a $20 million hit after managers at its supermarkets and liquor division were underpaid over the past six years.

Wesfarmers also admitted to $24 million in staff underpayments at its interim result, including $9 million at Target, adding to the pile of payment issues blighting Australia’s retail landscape.

Other companies admitting to underpayments recently include Qantas, Super Retail Group, the ABC, Commonwealth Bank, Rockpool Dining Group, Michael Hill Jewellers, Sunglass Hut, 7-Eleven and George Calombaris’ hospitality group MADE.

A number of firms have cited Australia’s complex labour rules and blamed the discrepancies on unintentional errors in payroll software.