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Last month Woolworths Group (ASX: WOW) announced it had underpaid staff by about $300 million, but Adero Law alleges the figure is more like $620 million.
A staff underpayment scandal that prompted reprimands from the Fair Work Ombudsman and led to executive pay cuts has just turned up a notch for Australia's largest retailer.
Canberra-headquartered employment law firm Adero Law filed a class action against Woolworths over the issue on Friday, representing around 7,000 current and former salaried employees of Woolworths Supermarkets.
"Adero is instructed that current and former Woolworths employees have suffered underpayments and systemic wage theft during their employment at Woolworths on a far greater scale than the retail giant has disclosed," the law firm says.
Woolies found the estimated cost of remediation would be between $200-300 million to cover all underpayments owing to salaried staff since 2015, which Adero estimates would be around $5,200 of underpayment per worker per year.
But Adero alleges the impact is much greater.
"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 firm states.
"This underreporting 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."
Adero has called on the retail chain to comprehensively explain to each worker how their backpay was calculated, and has urged Woolworths not to require any confidentiality or settlement deeds to be signed in order to receive the entitlements owed.
"Woolworths is reported to have commenced their internal review in February this year "when a handful of managers questioned why they were paid less than the [less experienced] employees they were managing". Mr Cameron Baker, a former Replenishment Team Manager at Woolworths Camberwell was one of those handful who spoke up," says Adero.
"Despite receiving a $12,000 increase to his annual salary Mr Baker did not receive any backpay for his previous five years of employment or an accurate account of underpayments.
"Mr Baker engaged the services of an industrial agent to perform a wage audit which revealed that Mr Baker is being underpaid at least $20,000 per year given the numerous loadings, penalties and allowances that attach to overtime, and work performed on night-shifts (9pm until 6am), weekends and public holidays."
In a response published on the ASX, Woolworths stood by its estimate that remediation was expected to be between $200-300 million and claimed the class action was without merit.
"On 30 October 2019, Woolworths Group committed to fully rectify all payment shortfalls to current and former salaried team members across the Group, including interest and superannuation contributions, as soon as possible," the company said.
"In keeping with that commitment, Woolworths Group continues to work towards making interim payments (including superannuation contributions and interest) before Christmas, to affected current and former salaried Supermarkets and Metro store team members for the two years reviewed to date (September 2017 to August 2019).
"In the context of its commitment to fully remediate all affected salaried team members, Woolworths Group believes the class action proceedings are without merit. Woolworths Group will fully defend the proceedings."
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