Woolworths Faces $1.2 Million Fine for Victorian Long Service Leave Underpayments

Woolworths, a leading supermarket chain, has incurred a penalty exceeding $1.2 million for underpaying hundreds of employees over $1 million in long service leave entitlements in Victoria.

Acknowledging its shortfall, Woolworths disclosed in a Melbourne court last week that it had inadvertently deprived at least 1,227 Victorian employees of approximately $1.24 million in long service leave dues due to an oversight in its payroll system, which persisted unnoticed for an extended period.

The underpayments varied in magnitude, ranging from a few hundred dollars to $12,000, spanning multiple years.

Today, Magistrate Nahrain Warda characterized the payroll discrepancy as a “systematic and widespread failure” on the part of one of the nation’s largest private employers.

“It is a significant lapse on their part for failing to ensure the absence of such errors and to promptly address any irregularities,” Ms. Warda remarked.

“It is reasonable to expect that a conglomerate of Woolworths’ scale, operating nationwide, would have robust payroll systems in place.”

According to court proceedings, Woolworths updated its payroll infrastructure in 2014 but did not conduct a comprehensive audit until 2020, prompted by emerging “red flags” in 2019.

Upon detecting the discrepancies during the review, Woolworths promptly self-reported the underpayment errors to Victoria’s Wage Inspectorate.

In delivering the sentence, Magistrate Warda noted the substantial number of affected individuals and the monetary extent of the underpayments as “significant aggravating factors.” However, she acknowledged Woolworths’ proactive measures in rectifying the payroll discrepancies and its voluntary disclosure of the underpayments.

Consequently, Woolworths Group was fined $1,227,000, while its subsidiary Woolstar incurred a fine of $36,000.

Had Woolworths not pleaded guilty, the company would have faced a fine of $2.2 million.

During proceedings, it was revealed that Woolworths had taken proactive steps to address the payroll discrepancies and had committed to reimbursing affected employees for their rightful entitlements along with accrued interest.

In response to the ruling, Robert Hortle, Commissioner of Wage Inspectorate Victoria, expressed concern that Woolworths’ miscalculation not only deprived employees of financial remuneration but also of time owed.

“The underpayments, reaching up to $12,000, translate to over 500 hours or 67 days of leave based on the minimum wage,” Mr. Hortle noted.

“It is regrettable that Woolworths, with its considerable resources, has underpaid its staff to such an extent.”

He emphasized that the judgement serves as a stark reminder to businesses, particularly well-resourced corporations, of the severe penalties for contravening long service leave regulations, underscoring the diligent scrutiny of entitlement infringements by both the Wage Inspectorate and the judiciary.

In a related incident in 2019, Woolworths admitted to underpaying 5,700 employees by up to $300 million in unpaid wages and entitlements over a decade.

Despite these challenges, Woolworths reported a full-year profit of $1.6 billion last year, marking a 4.6% increase.