In a stunning revelation that has rocked Australia's retail sector, supermarket behemoths Woolworths and Coles have admitted to systematically underpaying their staff, creating a combined financial black hole of nearly A$1 billion in owed back-pay.
The scandal, one of the largest of its kind in Australian corporate history, centres on the alleged misclassification of salaried department managers across both retail giants. This administrative failure meant these employees were not receiving the overtime and penalty rates they were legally entitled to under the General Retail Industry Award.
The Staggering Scale of the Shortfall
The figures are astronomical. Woolworths has announced its underpayment bill has ballooned to an estimated A$624 million, impacting a staggering 111,000 current and former workers. Their rival, Coles, faces a similarly colossal bill of A$366 million, affecting nearly 18,000 team members.
This is not the first time these companies have faced such allegations. Both had previously disclosed smaller underpayment issues, but the recent calculations have revealed the true, eye-watering extent of the problem, sending shockwaves through the industry and prompting outrage from unions.
A Culture of Non-Compliance?
The repeated nature of these disclosures has led to serious questions about the corporate culture and payroll practices within these highly profitable organisations. Critics and union representatives are accusing the supermarkets of prioritising profit over people, allowing systemic failures to persist.
The Retail and Fast Food Workers Union has been particularly vocal, labelling the situation a "massive wage theft" and calling for urgent reform and much heavier penalties for large corporations that fail to meet their basic wage obligations.
What Happens Next?
Both companies have pledged to urgently rectify the situation. They have committed to reimbursing every affected employee, including interest, in a process that is expected to take considerable time and administrative effort given the number of people involved, some of whom left the companies years ago.
However, the fallout is likely to extend far beyond back-payments. The reputational damage to these trusted household names is immense. The scandal has also intensified the scrutiny on the wider retail and hospitality sectors in Australia, where wage underpayment has been a persistent issue.
As the process of repayment begins, the conversation has now turned to accountability and ensuring such a widespread failure of Australia's wage system cannot happen again.
