Australia's two biggest supermarket chains may have to fork out more than $1 billion in repayments and other costs between them after a court ruled they underpaid thousands of salaried managers for years.
The Federal Court ruling would also require "significant and widespread changes" to accepted retail practice for both Woolworths Group and Australian businesses, large and small, the company said on Monday.
On Friday, Justice Nye Perram ruled Woolworths and Coles did not comply with their obligation to keep accurate employment records and paid workers their salaries without tracking other entitlements owed under the retail award.
Woolworths estimates that, based on the judgment, it will have to pay another $250 million to $470 million to salaried store leaders, with interest, superannuation and payroll taxes adding another $200 million to $280 million to its net liability.
That's a total pre-tax liability of as much as $750 million for Woolworths, or $530 million after taxes.
"This is a very preliminary estimate with significant uncertainty, and is based on a historical analysis of clocked time and attendance records," Woolworths said on Monday.
Coles estimates it will have to pay between $150 million and $250 million to address the court's findings, on top of the $31 million in remediation it has already paid.
Coles reiterated its apology on Monday.
What was the underpayment case about?
The Fair Work Ombudsman brought the class action case against Woolworths on behalf of 32 managers at five locations across Sydney, Melbourne and Brisbane from June 2015 to September 2019.
The case against Coles involved 42 managers, some of whom were employed in multiple shops, from 2017 to 2020.
Perram will conduct a case management hearing on 27 October to determine the next steps and compensation for the affected 27,700 employees.
Woolworths said it was too early to consider an appeal of any aspects of the complex decision, which spans 82,000 words.
