Woolworths Fined $1.2 Million for Underpaying Victorian Workers’ Long Service Leave

Supermarket behemoth Woolworths fined $1.2 million for failing to pay hundreds of employees more than $1 million in long service leave dues.

Last week in a Melbourne court, Woolworths acknowledged that due to a payroll system error, which remained unnoticed for several years, it had underpaid at least 1,227 employees in Victoria by as much as $1.24 million.

The amounts underpaid varied, with some being a few hundred dollars to as much as $12,000, spanning several years.

Today, Magistrate Nahrain Warda characterized the payroll mishap as a “systematic and widespread failure” by one of the country’s largest private employers.

“It is a significant oversight on their part for not ensuring that such errors are prevented and any discrepancies are addressed promptly,” Ms. Warda stated.

“One would expect that a corporation of this size, operating throughout Australia, would have robust payroll systems established.”

The court was informed that Woolworths revamped its payroll system in 2014, but did not conduct an audit until 2020 after concerns were raised in 2019.

Once the errors were identified during the audit, Woolworths voluntarily reported the underpayments to Victoria’s Wage Inspectorate.

During the sentencing, Magistrate Warda pointed out that the extensive number of affected employees and the substantial sum of underpayments were major aggravating factors. However, she acknowledged that Woolworths had taken constructive actions to rectify the payroll issues and had voluntarily disclosed the underpayments.

She imposed a Woolworths fined $1.2 million and $36,000 on its subsidiary Woolstar.

The company would have faced a $2.2 million fine had it not entered a guilty plea.

It was also revealed in court that Woolworths could have faced a maximum penalty exceeding $10 billion.

Woolworths has committed to reimbursing its employees for the amounts they were underpaid, plus interest.

Following the ruling, Robert Hortle, the Commissioner of Wage Inspectorate Victoria, commented that Woolworths’ incorrect calculation of long service leave deprived staff of not only money but also valuable time.

“The underpayments reached up to $12,000, which translates to over 500 hours or 67 days of leave when calculated at the minimum wage,” Mr. Hortle noted.

He expressed disappointment that Woolworths, despite its vast resources, allowed such significant underpayments to occur.

“Today’s ruling serves as a caution to businesses throughout the state, especially large, well-equipped firms, that there are substantial penalties for violating long service leave laws, and that both the Wage Inspectorate and the court view underpayment of entitlements with great seriousness.”

In 2019, Woolworths disclosed that it had underpaid approximately 5,700 employees by as much as $300 million in wages and other entitlements over ten years.

Last year, the company reported a full-year profit of $1.6 billion, marking a 4.6 percent increase.