Federal Court says unpaid wages cases against Woolworths and Coles could be merged into one proceeding

The country’s supermarket giants face the prospect of a marathon, highly damaging legal action on unpaid wages for up to 28,000 employees after the Federal Court said four separate proceedings could be merged into one.

In an unusual move, the court said two claims brought against Woolworths and Coles by the Fair Work Ombudsman could be heard at the same time, along with two other class action lawsuits facing each of the two supermarket operators.

In total, the case – now set down for seven weeks from June next year – would cover almost $500m in unpaid wage claims.

The decision, handed down by Federal Court judge Nye Perram, affects 19,000 Woolworths employees and 8767 Coles workers who were allegedly underpaid.

Adero Law launched its class action against Woolworths in 2019, shortly after the company admitted to underpaying thousands of staff.

It later sued Coles on behalf of managers underpaid between 2014 and 2020.

A $50m settlement with Woolworths was put on hold late last year after the Federal Court said it would not be approved. It was abandoned last month. Among the reasons given by the Federal Court for its scepticism about the settlement was the concurrent civil action launched by FWO.

In the latest decision, Justice Perram ruled the class action lawyers and the FWO could run a combined case, adding pressure to the supermarkets which have already made significant repayments.

The mode of the eventual case and prospect of a combined hearing will be decided by the court later this year after case management arguments. But Justice Perram has ruled the entire matter be fixed for trial for seven weeks.

He said the four actions overlapped but were not identical. He said they were divided into what he termed Tiers 1, 2 and 3.

Tier 1 issues concerned questions about the correct interpretation of the general retail industry award and contracts while Tier 2 covered questions of fact, such as the position of salaried employees. “The issues in all four proceedings substantially overlap in relation to Tiers 1 and 2,” Justice Perram wrote in his decision.

“This suggests that they should be heard together in some fashion in relation to those issues … I do not think enough is presently known to determine just how they should be heard. This will not become clear for some time.”

Justice Perram said in his ruling that – leaving aside the question of how the four cases would be tried together – the parties agreed a period of six weeks would be sufficient to deal with them. “Being pessimistic, I propose to treat this as seven weeks,” he said.

The merged court action comes as the retail industry faces a ballooning reparation bill.

In February, Woolworths said the wages shortfall had reached almost $600m, making it the largest corporate missing-wages case in the country’s history.

In its interim results, which showed the effects of the protracted Covid-19 pandemic, the nation’s biggest retailer revealed it had booked $144m after discovering new payment shortfalls among hourly paid ­retail staff.

In late 2019 Woolworths had disclosed it had underpaid 5700 of its staff by as much as $300m – a record at the time.

Within a year that figure had blown out to $427m.

The increasing cost of the underpayment scandal – including $21m detected since January – forced another apology from Woolworths chief executive Brad Banducci and triggered a new FWO investigation.

Coles in early 2020 said it too had discovered $20m in lost wages while a class-action lawsuit test case on behalf of some managers alleged a total underpayment of as much as $150m.

A spokesman for both Woolworths and Coles declined to comment on the Federal Court ruling. A spokesman for Adero Law did not respond to a request for comment on Monday.

Woolworths and Coles are among a growing number of companies – many in the retail industry – that have discovered hundreds of millions of dollars in underpaid wages, with some lost wages stretching back decades.

At the heart of the underpayments scandal is the complex award system, which has caused headaches for Woolworths, Coles, Super Retail Group and jeweller Michael Hill International as they trawl back through decades of staff and payroll records.

The FWO civil action against Woolworths, which was lodged in June 2021, is seeking $713,395 in repayments to 70 salaried managers who were underpaid between 2018 and 2019.

However, it is seen as a test case because the FWO wants the company to adopt its methodology when determining underpayments to all other salaried managers, with lawyers alleging Woolworths was underquoting its bill because it did not take into account the full extent of the unpaid hours they worked.

In February, Mr Banducci said Woolworths would spend $20m creating new teams and processes to investigate its wages underpayments problem.

“That is in our cost structure as it should be. So actually I’m not proud about it. I’m frustrated by it. But I think we are doing the right thing and that’s what you should do,” he told The Australian at the time.


Extracted from The Australian

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