NEWS: Coles Announce Underpayment of Wages

Earlier this month, Coles announced that they have underpaid employees an estimated $20million dollars in entitlements. Coles announced that so far, they have found approximately 5% of managers who were paid a salary from their supermarket and liquor stores were not paid correctly.

Fair Work Ombudsman, Sandra Parker said: “Coles Group joins the growing list of major corporates who have failed their employees by withholding their lawful entitlements when they should have measures in place to ensure that they do not”.

This is not the first time the Coles brand has been in the spotlight or associated with unpaid wages. In 2012, Coles was initially named as a respondent to litigations when the Fair Work Ombudsman (FWO) commenced legal proceedings against two sub-contractors operating at several Coles sites. The FWO alleged that Coles was aware that the employees at its sites were not being paid the correct minimum wages and conditions.

Rather than pursue proceedings against Coles, the FWO chose to enter an enforceable undertaking. In entering this undertaking with the FWO Coles declared an ethical and moral responsibility to stop the exploitation of vulnerable trolley collectors.  In complying with this undertaking Coles was required to audit wages, establish a fund to guarantee correct payment of subcontractors and move towards a model where they directly employed the trolley collectors.

Coles has joined the growing list of major companies that announced they have failed to pay employees their lawful entitlements.

In October 2019, Woolworths also revealed it had underpaid nearly 6000 workers over a period of 9 years an estimated $300 million. The company has also identified other underpayments for employees working at its Big W, Dan Murphy’s and BWS stores.

Other companies that have announced or been caught underpaying workers include; QANTAS, Commonwealth Bank, Bunnings, Sunglass Hut, 7-Eleven and George Calombaris group MAdE.

In a lot of cases, annualised salaries or flat hourly rates are behind the underpayments. It is common practice for many employers to pay their employees an all-inclusive salary or hourly rate. However, employers have an obligation to ensure that annualised salaries fully compensate employees for all entitlements payable under the applicable modern award.  An annualised salary can cover entitlements such as minimum weekly wages, allowances, penalties and overtime.

The Fair Work Commission has also reviewed annualised salary wage arrangements, as part of their four-yearly review of modern awards. Part of this review includes additional obligations for employers to ensure employees are not disadvantaged because they receive an annualised wage.

Most modern awards now require that where an annualised wage is paid, an employer must advise their employee in writing and keep a record of:

1. the annualised wage that is payable;
2. which of the provisions of the award (overtime, penalties, allowances etc) are satisfied by payment of the annualised wage;
   – the method by which the annualised wage has been calculated;
3. the limit number of ordinary hours which would attract the payment of a penalty rate under the award and the outer limit number of overtime hours which the employee may be required to work in a pay period or roster cycle without being entitled to receive an additional amount.

If you believe you may have been underpaid in your current or previous job, contact one of our HR Consultants today for a free case assessment.