Woolworths faces grilling over pay scandal
The Woolworths board is preparing for a fiery encounter with shareholders this morning as the supermarket giant faces a grilling over the $300 million underpayment of staff and subsequent launching of a class action.
In the latest bruising bout for executive boards this annual general meeting season, the supermarket giant's chairman Gordon Cairns will be peppered by representatives from the Australian Shareholders Association and corporate activist Stephen Mayne.
"To discover that we have underpaid so many of our team members has been incredibly disappointing," Mr Cairns told shareholders at Sydney's International Convention Centre.
In October, Woolworths revealed details of the underpayment of nearly 6000 salaried team members over the past nine years, amounting to $300 million.
The creation of a new enterprise agreement (EA) earlier in the year for wage staff members alerted the supermarket to the massive irregularities in payments.
This triggered an investigation by Woolworths, which said in October it had only analysed two years of data but admitted the underpayment could date back as far as 2010. At least 5700 staff could be repaid between $200 million and $300 million in total.
But a class action helmed by firm Adero Law with former night manager Cameron Baker as lead complainant alleges the "systemic wage theft" was on a "far greater scale" than the supermarket giant admits.
"Based on 12 months of due diligence investigations, Adero considers that the underpayments disclosed by Woolworths to date substantially understate the wages owed which Adero estimates at $620 million," the law firm said in a statement at the time.
"This under-reporting is likely due to errors in the principles that are applied within the Woolworths self-audit and the fact that Woolworths, in many instances, failed to keep accurate time and attendance records as required by the Fair Work Act 2009 which hinders the identification of overtime hours worked.
"For this reason, Adero considers the oversight of the Federal Court necessary to accurately settle this matter."
Mr Baker worked at a Melbourne store for more than five years and was one of many salaried team members who realised there was something wrong when staff working under him were being paid more.
He initially told A Current Affair in October he was underpaid "anywhere from $20,000 to $30,000".
"Basically, some of my team members were earning more than I had the ability to earn on a salary," he said.
But Mr Baker lodged a statement of claim on Friday in the Federal Court and he could be owed more than $150,000, according to reports from the Sydney Morning Herald and The Age.
The class action proposes to represent the former night manager and 7000 current and former Woolworths employees.
A spokesperson from the supermarket giant said the company was puzzled as to how Adero Law settled on $620 million and confirmed it would be defending the proceedings.
"We don't understand how they have arrived at that estimate," Woolworths said. "The range we published on October 30, 2019 is an estimate but we have taken a view of up to 10 years and factored in all group businesses."
Woolworths chief executive Brad Banducci told reporters in October the imbalance in payments, such as for Mr Baker and staff working under him, made the company realise there was an issue.
"We then convened a team to look at that issue and look at it holistically across all of the salaried team members who worked in Woolworths supermarkets," he said.
"We had to extract all the files for the last two years, and it has taken us a long time to analyse this."
With the help of consulting firm PwC, Woolworths investigated the irregularities of salaried store members compared with team members paid under the new agreement.
It said the majority of the staff affected were 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.
The scandal came after a number of high-profile retail networks and 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, with the Fair Work Ombudsman expressing frustration at adding another major company to the list.
"(We are) shocked that yet another large, publicly listed company has today admitted to breaching Australia's workplace laws on a massive scale," the Ombudsman Sandra Parker said in a release at the time.
"It is particularly concerning that many of these corporates have enterprise agreements in place that they negotiated but then failed to properly uphold the minimum standards."
Woolworths self-reported the matter to the Fair Work Ombudsman.