Coles Supermarkets under fire for allegedly underpaying $115m in wages

Court action serves as a warning to employers, says Fair Work Ombudsman

Coles Supermarkets under fire for allegedly underpaying $115m in wages

The Fair Work Ombudsman (FWO) has taken legal action against Coles Supermarkets Australia Pty Ltd (Coles), alleging it underpaid more than 7,500 employees.

The FWO alleges that most of the underpayments are overtime entitlements under the General Retail Industry Award 2010. The FWO also alleges that weekend and public holiday penalty rates, allowances and a range of other entitlements were also underpaid.

In 2020, Coles Group Limited disclosed to the FWO and the Australian Securities Exchange that it was reviewing the pay of its employees. After an assessment, the FWO found that Coles had allegedly underpaid 7,812 employees amounting to $115.2 million between January 2017 and March 2020.

The FWO also alleges that Coles’ remediation program has “significantly underestimated” its owed amounts and more than $108 million remains outstanding.

Fair Work Ombudsman Sandra Parker said underpayments had become a “persistent issue” across different industries.

“Businesses paying annual salaries cannot take a ‘set-and-forget approach to paying their workers. 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 in a media release.

“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 added.

Coles allegedly underpaid employees across regional and metropolitan areas in every state and territory. Most are department managers or work in the different sections of a Coles supermarket, such as customer service, bakery, fresh produce, among others.

The alleged underpayment of said salaried managers ranges “from small amounts up to more than $470,000,” and it is alleged that 45 employees were underpaid more than $100,000.

The FWO further said that Coles allegedly breached record-keeping laws under the Fair Work Act by failing to keep proper records, including those relating to overtime hours.

The FWO is seeking penalties against Coles for alleged multiple breaches of workplace laws, amounting to $63,000 per breach. It also seeks a court order requiring Coles “to rectify the total outstanding underpayments in full, plus interest and superannuation.”

A directions hearing in Sydney’s Federal Court has yet to be set.

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