Woolworths is facing legal action for allegedly underpaying managers, with the workplace watchdog hunting more than $710,000 in outstanding back pay
Woolworths is facing legal action for allegedly underpaying managers, with the workplace watchdog hunting more than $710,000 in outstanding back pay.
The announcement comes at the same time Woolworths Group announced its pubs and liquor stores business, Endeavour, will debut on the ASX in the next couple of weeks.
The Fair Work Ombudsman has launched Federal Court action against the supermarket giant over allegations it underpaid 70 salaried managers upwards of $1.1 million.
The regulator claims $713,395 has not been returned to the employees.
Woolworths disclosed underpaying thousands of employees in 2019 with the back-pay bill later calculated to cost the company around $390 million.
The admission sparked an investigation which assessed the records of 70 managers' work between March 2018 and 2019.
The alleged underpayments range from $289 to $85,905 for the 70 managers over the one-year time frame.
The ombudsman alleges the most significant underpayments were Woolworths' failure to pay the correct overtime entitlements to the salaried managers.
It will also try to prove annual salaries did not cover weekend and public holiday rates, meal allowances and annual leave loading, given the hours employees worked.
Fair Work Ombudsman Sandra Parker said it would be alleged salaried managers were significantly underpaid.
"This court action highlights that large employers face serious consequences if they do not prioritise workplace law compliance among other aspects of their business," she said.
Woolworths employed about 19,000 salaried managers between June 2015 and September 2019.
Woolworths Group chief executive Brad Banducci welcomed the opportunity for the court to clarify the issue.
"Since 2019 our highest priority has been, and continues to be, addressing the issue of underpayments for our team, and to ensure that it doesn't happen again," he said.
In a statement, Woolworths said it was reviewing the proceedings and described the matter as having complex legal issues involved.
"They address issues over which there is considerable uncertainty," the company statement said.
"The Woolworths Group remediation process to date has involved extensive calculations, assessment and review."
Meanwhile, Woolworths shareholders on Friday voted to demerge Endeavour, which owns BWS and Dan Murphy's, as well as hotels.
Fund managers and clients have become more conscious of the social impacts of their investments, and are cautious about backing alcohol and gaming.
The demerger would reduce the retail giant's exposure to these concerns, ratings agency S&P Global said.
Switzer Financial Group's Paul Rickard this month told the NAB website that Woolworths was increasingly out of favour with fund managers due to these concerns.
In April, Woolworths abandoned plans for a Dan Murphy's shop in Darwin after Indigenous communities protested the development on health concerns.
Endeavour comprised about 24 per cent of its parent company's earnings in the first-half of fiscal 2021.
However S&P said Woolworths would still have robust earnings and cash flow.
Endeavour will start trading on the ASX on June 24 on a deferred settlement basis. Regular trading of shares will begin on July 1.
Chairman Gordon Cairns said he expected Woolworths would remain one of the 20 largest companies on the ASX.
Woolworths will retain a 14.6 per cent stake in the company.
Hotelier Bruce Mathieson, who is the joint venture partner in the pubs business, will also own 14.6 per cent.
Woolworths in 2019 flagged its intention to form a separate drinks and hotels business. The efforts were delayed due to COVID-19.
Shares in Woolworths were lower by 1.05 per cent to $42.89 at 1537 AEST.
