Woolies faces up to $10b fine after pleading guilty to 1000 charges
In what seems like a cascade of misfortune for Woolworths, the retail giant has found itself embroiled in yet another controversy.
A week fraught with bad press took a turn for the worse when outgoing CEO Brad Banducci faced the threat of jail time for his refusal to address questions in a Senate inquiry probing supermarket price gouging. Now, the company is grappling with the repercussions of admitting to underpaying over a thousand former Victorian employees for their long service leave entitlements.
The admission, made in a Melbourne court, revealed that Woolworths fell short in compensating at least 1,235 former workers, amounting to a staggering $1.24 million in underpayments spanning from November 2018 to January 2023. While some employees were owed only modest sums, others were deprived of significant entitlements, with figures reaching up to $12,000 in the most severe cases.
The Melbourne Magistrates' Court learned that Woolworths, alongside its related company Woolstar, breached Victoria's Long Service Leave Act on a startling 1,227 occasions. The revelation came to light during an internal audit of the company's IT systems, prompting Woolworths to self-report the discrepancies to Victoria's Wage Inspectorate.
Woolworths' barrister, Saul Holt KC, highlighted the company's commitment to rectifying the situation, after discovering the discrepancies during an audit of its IT systems and self-reporting it to Victoria's Wage Inspectorate. "That's just the right thing to do," he said.
However, the gravity of the breaches places Woolworths at risk of facing a potentially astronomical fine, with a theoretical maximum exceeding $10.25 billion. While such a penalty could spell financial catastrophe for many, including a corporate behemoth like Woolworths, legal experts suggest that a more realistic figure would be capped at approximately $480,000, in line with typical penalties in Victorian magistrates courts.
The magistrate presiding over the case, Nahrain Warda, has deferred her decision until Wednesday, April 24, leaving Woolworths in a state of uncertainty. In addition to the impending financial penalty, Kathleen Crennan, representing the Wage Inspectorate of Victoria, advocated for Woolworths to be convicted, denouncing the underpayments as inexcusable. "There's really no excuse for this to have happened in the first place," she said.
In the face of mounting legal challenges and public scrutiny, Woolworths' reputation as an employer is under scrutiny. Despite assertions of being an "exemplary employer", founded on principles dating back to 1924, the company's track record is marred by repeated instances of underpayment scandals.
As Woolworths awaits the magistrate's verdict and braces for the fallout from its legal battles, the spectre of underpayment casts a long shadow over the company's corporate governance and raises broader questions about accountability within the retail industry.
Images: Woolworths