Finance Work Woolworths wage theft blows out to $315m

Woolworths wage theft blows out to $315m

Woolies underpayment total rises as review continues Photo: AAP
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Woolworths has admitted its staff underpayments have exceeded its worst estimates, blowing out to $315 million and likely to rise further.

The number of workers to have been left out of pocket has also grown, up from the company’s original estimate of 5700 to 7000.

Back in December, the supermarket giant said it expected the total wages shortfall to come in at the lower end of a $200 million-$300 million estimate.

In a statement to the ASX on Wednesday, Woolies admitted it had missed the mark. 

“The calculations of the salary payment shortfall involve a substantial volume of data, a high degree of complexity, interpretation, estimations, and are subject to further analysis of prior periods and the Fair Work Ombudsman’s ongoing investigation,” it said.

The earlier estimate was based on two years worth of information. But the company has nine years of records to review.

Furthermore, Woolies chief executive Brad Banducci said on Wednesday future underpayment incidents could not be ruled out.

Brad Banducci
“We have let our team down” Mr Banducci said. Photo: AAP

“Never say never – [but] we do feel we’ve put a robust process in place” he said. 

The company claimed the nine-year wage theft scandal was due to “an inconsistency” in calculations based on old, complicated enterprise bargaining agreements.

It discovered it had been keeping the cash when some shocked store managers complained in early 2019 they were earning less than their staff.

It has since been revealed that some Woolworths staff members could be owed up to $100,000.

Woolworths commenced a review but didn’t tell the Fair Work Ombudsman about the issue until August.

The scandal has affected Woolworths’ first-half profit result, which dipped 7.7 per cent to $887 million, despite a total revenue increase of 6.0 per cent to $32.42 billion. 

Big W – which is also owned by Woolworths – also had a successful six months. The retailer made $50 million before tax and interest, its first positive earnings since 2016. 

Woolworths is just one of many wage theft offenders accused of exploiting workers, joining Coles, Bunnings, 7-Eleven, Qantas and Caltex among many other shamed retailers. 

Woolies’ rival Coles last week also owned up to underpaying staff. It is expecting a $20 million hit after managers at its supermarkets and liquor division were underpaid for six years.

Hospo workers rally against wage theft in Melbourne. Photo: Instagram / hospo.voice

A 2019 KPMG report estimated that Australian workers could be underpaid by $1.35 billion each year, affecting 13 per cent of the population. 

This comes as the highly publicised wage theft scandal that led to the demise of George Calombaris’ MAdE hospitality group. 

Calombaris put his culinary empire into voluntary administration following a Fair Work investigation that exposed $7.8 million in wages owing to current and former staff.

Mr Banducci said he hoped that Woolies estimated wage theft figures would not continue to increase as “complex” review processes continued.