This is just the latest in Woolworths’ spiralling underpayment history, which was first signalled in 2019 to be worth $300 million, and has spawned legal challenges from the Fair Work Ombudsman and class actions alike.
“We’ve said from the outset that we would do the right thing by our team,” Woolies’ chief executive Brad Banducci said.
“We are disappointed to have identified further inadvertent underpayments and unreservedly apologise to our affected team members.”
And Woolworths isn’t alone. Coles, Zara, Michael Hill and Super Retail Group are among the list of retailers that have failed to navigate the Modern Award properly, or have been “sloppy” in their payroll practices, according to FWO Sandra Parker.
This is a view shared by Shop, Distributive and Allied Employees’ Association (SDA) national secretary Gerard Dwyer, who said he was dismayed that another underpayment has been found.
“It’s a further wake-up call to corporate Australia to undertake regular payroll reconciliations to ensure 100 per cent compliance and to invest in 21st century payroll systems,” said Dwyer.
“Too many businesses continue to run a wage theft and super theft business model, whilst the Government sits on its hands.”
According to Dwyer, the majority of underpayments have come to light since former Prime Minister John Howard did away with trade unions’ ability to spot check company payrolls – making it more difficult for external parties to hold businesses accountable.
“It should be restored immediately. Responsible businesses would have nothing to fear from restoration of such powers, and those employers systematically underpaying employees would be held to account,” Dwyer said.
But, according to Queensland University of Technology Professor Gary Mortimer, the issue isn’t necessarily so clear cut. Many retailers that have succumbed to underpayments in recent years have pointed to the complicated Modern Award system, which changes a workers’ compensation based on dozens of overlapping factors.
“From my own personal experience, the complexities associated with an Award structure that changes based on not only the hours that you work – but also whether you split a shift, if penalty rates cross over if you’re working a midnight shift – can be very confusing, even for the best of us,” Mortimer told Inside Retail.
“It’s not just retailers getting tripped up in complex Award structures, we’re seeing it across the board.”
Supermarkets were strong, Big W struggled
Beyond the business’ increased underpayment, however, Woolworths had a strong first half.
Group sales rose 8 per cent on last year to $31.8 million, and online sales grew 48 per cent to $3.4 million, though due to a higher cost of doing business net profit fell 6.5 per cent to $795 million.
Woolies’ supermarket sector enjoyed a strong Christmas period, with sales up 3.2 per cent, and rising e-commerce growth offset slowing in-store activity due to the Omicron wave.
Big W, however, felt the impact of store closures across New South Wales and Victoria heavily across the half: with earnings down 81 per cent to $25 million, compared to $133 million during the same period last year.
The discount department store did see strong online adoption through the half, since most stores were closed, with a 69.4 per cent increase in e-commerce sales. Woolworths’ online performance was strong overall, said Mortimer.
“Woolworths delivered about $1 billion more in online sales than [rival supermarket] Coles, maybe because they’ve invested more heavily into it and they’re getting some runs on the board,” Mortimer said.
“The challenge of having a high penetration in your online, though, is if 10 or 15 per cent of your total sales are coming from a centralised online setting, what does the future hold for your physical asset?”
Mortimer also noted that facilitating online orders in-store is not necessarily a good use of time for team members, who are often stocking and re-stocking shelves to fulfil online orders.
This could be why both Coles and Woolworths are investing into automated fulfilment systems.
Cost pressures going forward
One of the biggest challenges to the supermarket sector in the short to medium term is likely to be a rise in inflation – the sector is largely fought on low shelf prices, and if securing stock begins to cost more, that fight will become difficult to maintain.
“In a highly competitive grocery market no retailer wants to be the first to lift prices because of cost pressures,” Mortimer said.
“I do think that over the next 12 to 18 months we’re going to see food prices increase, especially imported dry groceries.”