The Australian Fair Work Ombudsman (FWO) launched legal action against supermarket giant Coles on Dec. 2 for allegedly underpaying more than 7,800 employees for a total of $115 million (US$82 million) between January 2017 and March 2020.
FWO assessed disclosed information by Coles on wages and entitlements and alleged that the underpayments largely occurred because the annual salaries were insufficient to cover minimum lawful entitlements, such as overtime, weekend, and public holiday pay rates.
FWO Sandra Parker said underpayments caused by salaries that do not sufficiently cover awards had become a persistent issue among businesses of all sizes and industries.
“Businesses paying annual salaries cannot take a ‘set-and-forget’ approach to paying their workers. Instead, employers must ensure wages being paid are sufficient to cover all minimum lawful entitlements for the hours their employees are actually working and the work they are actually doing,” Parker said.
Most alleged underpaid staff were in managerial positions, with 45 allegedly underpaid more than $100,000 (US$71,000), and in one instance, just over $470,000 (US$335,000).
“The FWO alleges Coles’ salaried managers were generally contracted and rostered to work 40 hours per week but often worked more hours,” the FWO said, adding that these managers often worked an average of one extra hour to their rostered schedule.
The allegedly underpaid employees worked in regional and metropolitan areas across all states and territories.
“This court action against Coles should serve as a warning to all employers that they can face serious consequences if they do not prioritise workplace law compliance,” Parker said.
Coles Group said in a statement to its shareholders that on February 2020, it began conducting a review into salaried pay arrangements covered by the General Retail Industry Award 2010 (GRIA) and following internal investigations, it organised a remediation program that incurred $13 million in costs to date.
Following the announcement, the FWO also began an investigation into the payment arrangements. Coles said it has communicated with the FWO since the investigation began.
“Coles is currently reviewing the proceedings, which include issues relating to the interpretation and application of various provisions of the GRIA and to the extent that further remediation may be required, we will update the market accordingly,” the statement said.
Parker said a current priority for the FWO was ensuring remediation programs were being undertaken correctly by large employers reporting underpayments.