In 2019, Woolworths self-reported to the Fair Work Ombudsman (“FWO”) with respect to underpayment of salaried employees employed across supermarkets and in Woolworths’ Metros. The FWO subsequently conducted its own investigation, identifying through a sample size of approximately 70 employees that the annual salaries paid by Woolworths Group Limited and Woolworths (South Australia) Pty Limited to their salaried managers was not sufficient compared to the hours they worked.

In June 2021, commenced proceedings against Woolworths’ companies in the Federal Court of Australia alleging unrectified underpayments of salaried managers. Through the Court proceedings, the FWO is claiming that Woolworths Group Limited and Woolworths (South Australia) Pty Limited’s annual salaries for salary managers did not cover entitlements owing to the employees under the relevant award, General Retail Industry Award 2010, in light of actual hours worked. Such entitlements owing to the employees included various overtime rates, weekend and public holiday penalty rates, meal allowances and annual leave loading. The FWO also alleges the failure to make or keep records.

Through the Court proceedings, the FWO is seeking that Court orders be made for the underpayments to the sample size be rectified, and for the companies to identify the underpayments of all other salaried managers who were affected by the underpayments and that interest and superannuation be payable.

The FWO is also seeking pecuniary penalties be ordered which are in effect civil fines ordered by the Court for contraventions of a workplace law. As of 1 July 2021, the present maximum penalty for a corporation is $66,600 per contravention.

The above example is a reminder of the potentially serious implications of failing to comply with a Modern Award with respect to annual salaries and failing to make and keep records.