Woolworths underpaid staff by up to $300 million

Woolworths underpaid staff by up to $300 million

Australia's largest retailer has 'unreservedly apologised' after a review prompted by an enterprise agreement (EA) found 5,700 were underpaid.

Woolworths Group's (ASX: WOW) internal review of its supermarkets and Metro stores found inconsistency in pay for salaried store team members compared to team members under the new EA.

The review found the number of hours worked and when they were worked were not adequately factored into the individual salary settings for some staff.

The company's investigations will now be extended to all Australian businesses in the group including BWS, Dan Murphy's and Big W.

Based on the group's two years of data and initial modelling, it estimates a one-off impact for remediation in the range of $200-300 million, assuming the issue could go as far back as the implementation of the modern award in 2010

An update will be provided at Woolworths' half year results in February.

"As a business we pride ourselves on putting our team first, and in this case we have let them down," says Woolworths Group CEO Brad Banducci.

"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 group clarifies it has around 145,000 team members covered by an EA who are not affected by the review, but some of its 19,000 team members who are paid annual salaries will be.

The retrieval and review individual rostering, time and attendance, and payroll data across all businesses - some 11 million individual records - is expected to take at least until the end of the financial year to complete.

The matter has been reported by Woolworths to the Fair Work Ombudsman, which today expressed its shock that yet another large publicly listed company has admitted breaching Australia's workplace laws on a massive scale.

The FWO noted Woolworths joined a range of corporates including Wesfarmers, Commonwealth Bank and many others in failing to ensure that staff are receiving their lawful entitlements.

"The Fair Work Ombudsman will conduct an investigation in relation to Woolworths' self-disclosure and hold them to account for breaching workplace laws," Fair Work Ombudsman Sandra Parker said.

Parker expressed frustration at the upsurge in large-scale businesses admitting that they did not classify staff correctly, pay overtime or penalty rates, or complete annual pay reconciliations where they were required.

"The Fair Work Ombudsman will conduct an investigation in relation to Woolworths' self-disclosure and hold them to account for breaching workplace laws," she said.

"Lately, we are seeing a disturbing number of large corporates publicly admitting that they have underpaid their staff. Some of these matters go back many years and several comprise millions of dollars owed to workers. This is simply not good enough.

"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. These sorts of careless missteps by business can be costly, often running up into the millions of dollars across an entire workforce."

Parker said the non-compliance identified within many of these companies is caused by ineffective governance combined with complacency and carelessness toward employee entitlements.

"If companies do not prioritise workplace compliance from the outset, it can take significant resources and time to fix, particularly where companies do not have accurate records of times worked and wages paid.  It is not surprising that workers lose trust in their company when this happens," she said.

"We encourage corporates to cooperate with us to rectify breaches, but they must understand that admission is not absolution. Companies should expect that breaking workplace laws will end in a public court enforcement outcome.

"I intend to take this issue up with Boards around the country, because frankly that is the level within organisations that should be taking an active leadership role on this issue, and seeking assurance about compliance from executive managers."

Woolworths partners with zero-waste shopping platform Loop

In more positive news, yesterday Woolies announced it had partnered with US-headquartered TerraCycle to introduce its cutting-edge zero-waste reusable packaging solution Loop to Australian shores.

Once the solution is implemented in mid-2021, shoppers will be able to return the packaging from a wide range of common products to then be cleaned, refilled and reused, creating a circular shopping system.

For deliveries, these products will be delivered specially designed reusable shipping tote that can be picked up by Woolworths after use.

Products included in the new system range from washing detergent to shampoo to juice to ice cream.

"Our customers are increasingly telling us they want products that are good for them, and good for the planet," says Woolworths general manager of quality, health & sustainability,  Alex Holt.

"We are pleased to be working with innovative partners like TerraCycle to lead the way in offering new and cutting-edge solutions to cut down on plastic waste.

"Helping bring Loop to Australia is a further step in our long term ambition to reduce our impact on the environment and support a circular economy."

Loop itself is based in Canada partners with major brands like Procter & Gamble, Unilever, PepsiCo and Nestlé to deliver its solution with expansion plans in the UK, Canada, Germany, Japan, and of course Australia.

The revolutionary solution was announced at the World Economic Forum in January this year and launched in May 2019 in New York and Paris.

"Woolworths is the perfect partner to bring Loop to Australia, due to its operational scale and commitment to environmental sustainability," says Loop's VP of global business development Anthony Rossi.

"Together we will help eliminate the idea of waste and bring a better product experience to consumers."

At the partnership launch in Sydney yesterday, Minister for Industry, Science and Technology Karen Andrews praised Woolworths for showing the initiative to embrace a recycling solution that will significantly reduce its waste packaging.

"TerraCycle is a global leader in recycling innovation. This partnership with TerraCycle to roll out Loop nationally sets a great example for other businesses," Andrews said.

"It is vitally important that both governments and the private sector play their part in reducing waste and embracing recycling solutions. I look forward to other businesses adopting similar initiatives."

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