Woolies will repay up to $300 million. Picture: AAP Image/Dan Himbrechts
Woolies will repay up to $300 million. Picture: AAP Image/Dan Himbrechts

Woolworths underpays staff by $300 million

Woolworths announced this morning it had underpaid nearly 6000 employees over the past nine years and would repay up to $300 million.

The supermarket giant says the major irregularity was uncovered during a review triggered this year by the implementation of a new enterprise agreement with employees at all supermarkets and the smaller Metro stores.

The underpayment affects "salaried team members" not checkout and supermarket floor staff.

Woolies said it had only analysed two years of data but admitted the underpayment could date back as far as 2010. Up to 5700 staff could be repaid between $200 million and $300 million in total.

It said a review would now be extended to all its other businesses in its Australian network, including Big W department stores and the liquor division featuring Dan Murphy's and BWS.

The company released a statement this morning saying it was "deeply sorry".

"As a business, we pride ourselves on putting our team first, and in this case we have let them down," group chief executive Brad Banducci said in a statement.

"We unreservedly apologise. The highest priority for Woolworths Group right now is to address this issue, and to ensure that it doesn't happen again."

The review was launched by the company earlier in the year when managers questioned their payments compared to the General Retail Industry Award.

With the help of consulting firm PwC, it investigated the irregularities of salaried store members compared to team members paid under the new enterprise agreement.

It said the majority of the staff affected are current and former salaried department managers at store level, with none of the 145,000 people covered by an enterprise agreement affected. Those wages that have been identified as being underpaid in the two years between September 2017 to August 2019 will be paid back before Christmas, Woolworths has promised.

But the company said retrieving and reviewing rostering, time and attendance, and payroll data across all businesses is expected to take at least until September 30 to complete.

Repayments will be made as soon as each respective year of the review is completed.

The announcement is a significant blow for the company which overshadows a massive first-quarter sales growth jump, comfortably beating fierce rivals Coles.

Driven by the success of its Lion King Ooshies and Discovery Garden checkout giveaways, sales at supermarkets surged 6.6 per cent on the same period a year ago, easily trumping the 0.1 per cent from Coles.

The underpayment at Woolworths comes after a number of recent high-profile hospitality businesses failed to meet industry standards.

These include Neil Perry's Rockpool Dining Group, which owes staff at least $10 million, and fellow celebrity chef George Calombaris, who repaid workers $7.8 million.

Woolworths has reported the matter to the Fair Work Ombudsman.

The company entered into a new compliance partnership with FairWork last year after it was discovered that three cleaning companies and a former sole trader were underpaying Korean cleaners at Woolworths' sites in Tasmania.

In 2014, Fair Work took legal action against two subcontractors operating at several Coles sites for underpaying 10 trolley collectors over $200,000.

-with AAP