Australian watchdog sues Woolworths over staff underpayments

People walk past a Woolworths supermarket following the easing of restrictions implemented to curb the spread of the coronavirus disease (COVID-19) in Sydney, Australia

Australia’s largest supermarket chain Woolworths Group (WOW.AX) is being sued by the country’s industrial relations watchdog for underpaying staff, more than a year after the retailer admitted not paying thousands of workers in full.

The Fair Work Ombudsman (FWO) On Thursday filed civil proceedings at the Federal Court seeking the repayment of outstanding amounts it alleges Woolworths still owes its workers, as well as penalties against the supermarket giant.

After closely reviewing a sample of 70 employee files out of about 19,000 workers that were allegedly underpaid, the regulatory body found Woolworths had only back-paid about 40% of the A$1.172 million it still owed those people.

The regulator wants the court to force Woolworths “to rectify the total outstanding underpayments in relation to the 70 managers whose records were assessed and … to then apply those calculation methods to rectify any underpayments owed to all other affected salaried managers, plus interest and superannuation,” it said in a statement on Friday.

Woolworths said in a statement it was reviewing the proceedings and continued to remediate affected staff, and that there was “considerable uncertainty” about the issues raised by the proceedings. So far, it had repaid A$370 million to current and former employees, it added.

Shares in the company fell 1.8% while the wider market (.AXJO) was 0.31% higher.

In October 2019, Woolworths admitted that it had underpaid thousands of supermarket workers for years.

The scandal prompted some politicians to call for a parliamentary inquiry into what they called “wage theft” in Australia.

In June 2020, Woolworths booked a one-off A$500 million remediation charge related to the shortfalls.

The FWO did not disclose the magnitude of the penalty it was seeking, as that would be decided by the court if legal action is successful.

The government body was investigating about 90 other companies that had self-reported worker underpayments, including some large listed companies that it declined to name, a spokesperson for the ombudsman said.

“We investigate each self-report made by a corporate entity, and we expect these employers to fully co-operate with our investigations to ensure that employees are quickly repaid their entitlements. Our investigations include a rigorous analysis of how those rectifications are completed to ensure they are accurate.”

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