FEDERAL COURT RULING
- Federal Court ruled on 5 September 2025 that Coles and Woolworths underpaid nearly 30,000 salaried managers
- Companies failed to keep accurate employment records and improperly used “set-off” arrangements³
- Justice Nye Perram found employers must pay entitlements each pay period, not annually⁴
FINANCIAL IMPACT
- Combined liability could exceed $1 billion between both retailers⁵
- Woolworths estimates additional $180-330 million remediation costs, plus $140-200 million in interest⁶
- Coles projects $150-250 million in further payments⁷
- Woolworths already repaid $330 million; Coles paid $31 million⁸
INDUSTRY IMPLICATIONS
- Australian Retailers Association calls decision “alarming” with widespread compliance burdens⁹
- Employment experts warn of broader ramifications across Australian business community¹⁰
- Fair Work Ombudsman Anna Booth describes ruling as “important decision”
NEXT STEPS
- Further hearing scheduled for late October 2025
- Companies reviewing 200-page “complex” judgement
- Fair Work seeking court orders for penalties and remediation
Key Employer Actions Required:
□ Review existing set-off clauses – Employers need to audit their current arrangements to ensure proper drafting and implementation
□ Assess compliance risks – The ruling highlights substantial risks for employers whose set-off clauses are either poorly implemented or don’t comply with modern award requirements
□ Strengthen record-keeping practices – Employers shouldn’t rely solely on set-off arrangements and employee timesheets to meet their legal record-keeping obligations
Sources: ¹ SBS News ² Inside Retail ³ HR Leader ⁴ The Conversation ⁵ Inside FMCG ⁶ Capital Brief ⁷ Drinks Digest ⁸ AInvest ⁹ ABC ¹⁰ The Conversation
