In brief 3 min read
On 17 June 2021, the Fair Work Ombudsman (FWO) commenced proceedings in the Federal Court against Woolworths in relation to the underpayment of its salaried managers working in supermarket and metro stores.
How does this affect you?
The FWO's commencement of proceedings against Woolworths reflects its increased regulatory focus on addressing allegations of non-compliance by large corporate employers and ensuring wage remediation programs are being undertaken by employers correctly.
Background and key takeaways
- In October 2019, Woolworths publicly announced it had underpaid approximately 5,700 managers after an internal review found annual salaries for these employees (which had been set to cover ordinary hours and reasonable overtime) did not adequately factor in the actual number of hours worked or when they were worked.
- In its statement of claim, the FWO alleges that the annual salaries paid to managers were not sufficient to cover the entitlements they were owed under the General Retail Industry Award 2010 (GRIA), and that Woolworths also did not keep adequate records for the required seven year period relating to overtime, loadings, penalty rates and allowances payable to these employees.
- The proceedings are based on FWO's assessment of the records of a sample of 70 in-store salaried managers for their work and pay entitlements over a one year period. Despite Woolworths having calculated the amounts owing to these employees and already making back-payments to them, FWO alleges that further back payments remain outstanding to these sample employees, and potentially others within the underpaid cohort, based on its own remediation calculation methodology. This suggests an apparent divergence between FWO's remediation methodology and interpretation of the relevant GRIA entitlements, and the methodology adopted by Woolworths.
- FWO seeks penalties for alleged non-compliance with the applicable award entitlements and employer recordkeeping requirements under the Fair Work Act, as well as orders that Woolworths make further back-payments to affected employees in accordance with FWO's calculation methods.
- The proceedings are expected to be listed for a next case management hearing in October 2021.
The proceedings highlight some of the challenges for employers in addressing underpayment issues. We will provide a further update as the proceedings progress. Allens recently hosted a webinar to further discuss the practical issues relating to the management of underpayment matters, including issues raised in the Woolworths matter.