Woolworths and Coles Face Hundreds of Millions in Underpayment Costs

Australia’s largest supermarket chains, Woolworths and Coles, are bracing for massive financial hits after the Federal Court ruled on historical staff underpayments. The decision, brought forward by the Fair Work Ombudsman (FWO), could see both retailers pay hundreds of millions more than previously anticipated.

Woolworths estimates a post-tax charge between A$180 million (US$117.9 million) and A$330 million, with additional interest and tax potentially adding another A$140 million to A$200 million. The retailer revealed that the liability covers overtime payments and further remediation for salaried store team members, spanning 2013 to 2019. Woolworths described the ruling as “lengthy and complex,” noting it is too early to consider an appeal.

Coles anticipates extra remediation costs of A$150 million to A$250 million, on top of the A$31 million already paid to affected workers. The supermarket giant confirmed it is still assessing the full implications of the court’s decision on its operations.

The FWO launched the case in 2020, alleging that the two chains underpaid nearly 27,000 employees and that their internal remediation programs “significantly underestimated” the amounts owed. Together, Woolworths and Coles account for around two-thirds of Australia’s grocery sales, making this case one of the most significant wage underpayment rulings in the country’s retail sector.

Following the announcement, shares of Woolworths and Coles dipped 0.5% and 0.9% respectively, aligning with a weaker broader market.

The ruling highlights growing scrutiny on wage compliance across Australia’s retail industry, with regulators pushing for accountability and stronger payroll systems to prevent widespread underpayment scandals.