Woolworths to defend class action over underpayments

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Woolworths to defend class action over underpayments

Woolworths revealed in late-October this year that it had discovered payroll errors affecting around 5,700 of its employees. Some dating as far back as 2010. The initial estimate of a backpay bill is between $200 million and $300 million.

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Woolworths revealed in late-October this year that it had discovered payroll errors affecting around 5,700 of its employees. Some dating as far back as 2010. The initial estimate of a backpay bill is between $200 million and $300 million.

As a result, Woolworths stated in a release that they were fully committed to rectifying all payment shortfalls to current and former salaried team members across the Group, including interest and superannuation contributions, as soon as possible.

Woolworths states they will 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).

Adero Law's latest class action is challenging Woolworths' announcement that it had underpaid 5,700 salaried employees at its supermarkets and metro stores by up to $300 million since 2010.

Woolworths said it uncovered an "inconsistency" between the remuneration of salaried store employees and those paid under a new enterprise agreement, during a review earlier this year that followed the deal's implementation.

While annualised salaries for store employees are set to cover ordinary working hours and reasonable overtime, Woolworths said they are "entitled to be paid the higher of their contractual salary entitlements, or what they otherwise would have earned for actual hours worked" under the award. As well as committing to backpay all affected employees, with superannuation and interest, the retailer promised to extend its review to scrutinise records from when the modern award took effect in 2010.

In the class action filed in the Federal Court on Friday 29 November 2019, Adero challenges the calculations, which put the quantum of underpayment on a per-worker, per-year basis at about $5,200.

It claims Woolworths underpaid its lead applicant, former Camberwell store replenishment team manager, Cameron Baker by about $60,000 in penalty rates under the General Retail Industry Award and $115,000 for additional hours worked outside of his rostered hours.

Despite receiving a $12,000 increase to his annual salary, Adero says he "did not receive any backpay for his previous five years of employment or an accurate account of underpayments".

"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," the law firm says on its class action website.

"This underreporting is likely due to errors in the principles that are applied within the Woolworths self-audit and the fact that 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," Adero states.

For this reason, Adero considers the oversight of the Federal Court necessary to accurately settle this matter.

Estimating the class group to be about 7000, Adero is inviting salaried employees who worked for Woolworths at any time since November 29, 2013, to register their interest, along with anyone covered by the agreement who was "not paid for hours worked".

Pledging to "fully defend the proceedings", Woolworths stands by its estimate that the "one-off impact for remediation is expected to be in the range of $200-300 million (before tax)" but says it will provide an update in its half-year 2020 results in February. In the meantime, Woolworths says it "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 states that they will fully defend the proceedings.
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