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Grocery giants face ‘marathon, damaging’ court case over underpayments

(Source: Bigstock.)

Australia’s two largest supermarket operators – Woolworths and Coles – are set to face a seven-week-long Federal Court case over employee underpayments after a judge made an unusual order that four separate cases could be heard as one. 

But the proceedings will not begin until June next year, extending the wait for affected staff to be paid, should the court rule in favour of reimbursements. Some 28,000 employees of the two chains could be affected by the cases and the underpayments would cover claims totalling almost $500 million.

In what The Australian described as “the prospect of a marathon, highly damaging legal action” for the grocery giants, the court will hear two claims lodged by the Fair Work Ombudsman (FWO) and two class-action lawsuits filed by Adero Law. 

Last year, Woolworths agreed to a $50 million settlement over one case, but that was suspended and later abandoned after the court said it would not be approved – citing a concurrent case brought by the FWO.

Now, Federal Court judge Nye Perram, has ruled lawyers involved in the class action could join the FWO to run a combined case. A final decision will be made later this year when further details of how the cases will proceed will be outlined. 

The FWO is attempting to recover $713,395 in underpayments by Woolworths to 70 salaried managers covering 2018-19.

Earlier this year, Woolworths estimated the value of its wages shortfall to be around $600 million and its half-year results contained a provision for $144 million after short-payments to staff paid on an hourly basis were uncovered. That followed the discovery in late 2019 of $300 million in underpayments to 5700 staff, which later rose to $427 million. 

Rival Coles has admitted to $20 million in underpayments to some store staff in early 2020 and a class action on behalf of some store managers alleged a further $150 million had been underpaid. 

Both supermarket chains say they have adapted internal processes to ensure underpayments do not occur in the future. But the current cases now look like stretching out some 18 months – more if appeals are lodged on the court’s decision.  

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