Supermarket Giants Face Hefty Costs After Court Rules on Staff Underpayment

Australia's largest supermarket chains, Woolworths and Coles, are grappling with hundreds of millions in additional financial liabilities following a recent federal court judgment on historical staff underpayments. The ruling, which stemmed from a 2020 case by the industrial relations watchdog, found that the companies had not adequately compensated tens of thousands of their workers.

Woolworths estimates a one-time charge ranging from $180 million to $330 million after tax, with an extra financial burden of up to $200 million for associated interest and taxes. Coles, meanwhile, projects a remediation bill of $150 million to $250 million. Both companies have cautioned that these are preliminary figures and that the judgment is complex.

The news led to a drop in their share prices, with Woolworths falling by over 0.5% and Coles by more than 0.8%. This legal and financial blow comes as the supermarkets are already under fire for their profitability and pricing strategies amidst a cost-of-living crisis. Despite posting substantial annual profits—Woolworths at $1.6 billion and Coles at $1.1 billion—they face a parliamentary inquiry into their business practices. The court's decision is anticipated to force widespread changes across the Australian retail sector.