Woolworths wage theft blows out, flags redundancies

Woolworths now says it owes thousands of employees nearly $400 million in underpaid wages.

Woolworths now says it owes thousands of employees nearly $400 million in underpaid wages. Photo: Getty

Supermarket giant Woolworths has revealed another blowout in its wage theft scandal, admitting it owes $390 million to short-changed workers after uncovering more in its hotels division.

In an announcement to the ASX on Tuesday morning, the retailer said it had identified previously unrecognised payment shortfalls in salaried staff at its ALH Hotels.

It came as the company also said it would set aside $176 million to cover redundancy payouts for workers who will lose their jobs as it replaces distribution centres in Sydney and Melbourne with two more automated centres in Sydney.

Woolworths has not said how many jobs will be lost in its five-year redevelopment plan. But the ABC and News Corp are reporting it will be as many as 1300.

The SDA, which is the union for retail, warehouse and fast food workers, said it was disappointed that further automation of Woolworths’ distribution will mean job losses in the medium term.

“The union hopes Woolworths lives up to its commitment to be ‘conservative’ in handling a process that comes as the COVID-19 pandemic is making the employment of many low-paid workers more fragile and insecure than at any time since the Great Depression,” SDA national secretary Gerard Dwyer said.

Nor did Woolworths say how many staff are now affected by its underpayment, but said they had not been paid properly under the general hospitality industry award in the 2018 and 2019 financial years.

With the inclusion of additional wage records, accrued interest on back-payments still owed and a broader review of awards across the group, Woolworths said the amount it owed current and former staff had blown out by a further $105 million.

The company’s underpayment is one of Australia’s biggest wage theft scandals and was first revealed in October 2019, when Woolworths said it owed about 5700 staff between $200 million and $300 million.

Mr Dwyer said the admission was another acknowledgement that “too many companies have simply been getting their payroll responsibilities wrong”.

“This would not have happened if companies had paid greater attention to their payroll systems and to the modern awards they are legally responsible for applying to ensure their employees get the pay to which they are entitled,” Mr Dwyer said.

In February, Woolworths admitted the shortfall had exceeded its worst estimates, blowing out to $315 million – and said it was likely to rise further. It had also been found to affect 7000 employees.

“The group continues to review the estimated payment shortfall liability, which is based on calculations involving a high degree of complexity, and which remains subject to further analysis of historical years and the completion of the review of all awards applicable across the group,” the company said on Tuesday.

Chief executive Brad Banducci said Woolworths was committed to fully rectifying any shortfalls as quickly as possible.

Also on Tuesday, the company said trading had remained strong in the June quarter, with food sales in Australia up 8.6 per cent, and in New Zealand up 15.1 per cent.

Sales at Big W jumped 27.8 per cent in the 10 weeks to June 14, while the Endeavour drinks business had 21.4 per cent growth in the same period.

By comparison, sales had grown in the low single digits during the first half in all four segments.

The retail giant said it expected full-year earnings before interest and tax to be $3.2 billion-$3.25 billion, compared to $3.29 billion for a 53-week period last year.

However, earnings for its Hotels business, which has been hit by venue closures, will be between $160 million and $170 million, down from $355 million last year.

Woolworths will report full-year results on August 27.

-with AAP

Topics: Woolworths
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