The Fair Work Ombudsman, Australia’s workplace watchdog, has launched legal action against Coles Supermarkets Australia Pty Ltd alleging it underpaid more than 7,500 salaried employees a total of AUD 115 million (USD 81.7 million).

Coles Group Limited disclosed to the Ombudsman and the Australian Securities Exchange in 2020 that it was reviewing the pay of award-covered, salaried employees in its liquor and supermarket businesses.

The Fair Work Ombudsman assessed the wages and entitlements of thousands of salaried Coles employees, finding Coles had allegedly underpaid 7,812 employees a total of AUD 115.2 million (USD 81.8 million) between 1 January 2017 and 31 March 2020.

The workplace watchdog alleges that most of the underpayments were the result of Coles paying salaried employees annual salaries that were insufficient to cover their minimum lawful entitlements, given they generally performed significant amounts of overtime work. It also alleges that Coles’ remediation program has significantly underestimated amounts owed to the employees and that more than AUD 108 million (USD 76.7 million) remains outstanding.

“Businesses paying annual salaries cannot take a ‘set-and-forget’ approach to paying their workers. Employers must ensure wages being paid are sufficient to cover all minimum lawful entitlements for the hours their employees are actually working and the work they are actually doing,” Sandra Parker, the Fair Work Ombudsman, said.

The allegedly underpaid Coles’ employees were located in regional and metropolitan areas across every state and territory. Most were responsible for managing a department or function within a Coles supermarket, such as bakery, customer service, delicatessen, dry goods, fresh produce, meat and night-fill.

The alleged underpayment of these salaried managers ranges from small amounts to AUD 471,647 (USD 335,185) and it is alleged that 45 of them were underpaid more than AUD 100,000 (USD 71,067).

Among the other claims from the Ombudsman include that most of the underpayments relate to overtime entitlements under the General Retail Industry Award 2010. Furthermore, the Ombudsman claims Coles’ salaried managers were generally contracted and rostered to work 40 hours per week but often worked more hours, with salaried managers alleged to have worked an average of approximately one hour in addition to their rostered hours per shift between October 2017 and March 2020.

The Ombudsman also alleges that weekend and public holiday penalty rates, allowances and a range of other entitlements were also underpaid and that Coles breached record-keeping laws under the Fair Work Act by failing to keep proper records.

The workplace watchdog is seeking penalties against Coles for multiple alleged breaches of workplace laws, in addition to a court order requiring the company to rectify the total outstanding underpayments in full, (plus interest and superannuation). The company faces penalties of up to AUD 63,000 (USD 44,757) per breach.