Woolworths and Coles have addressed media claims that a Federal Court ruling regarding underpayment of their workers could cost them up to $1 billion.

The ruling, announced on 5 September, found the retailers had not properly recorded overtime for up to 28,000 salaried managers dating back to 2013 and had relied too much on rosters.

Almost 9000 Coles staff at Coles and 19,000 at Woolworths were considered in the ruling.

Coles Group released a statement saying: “In February 2020, Coles Group Limited (Coles, ASX:COL) announced it was conducting a review into the pay arrangements for all team members who received a salary and were covered by the General Retail Industry Award 2010 (GRIA).

“Coles sincerely apologised to affected team members and conducted a remediation program. To date, Coles has paid $31
million of remediation costs. As at 29 June 2025, Coles has a provision of $19 million reflected in its financial statements.

“A class action was instituted in May 2020 and the Fair Work Ombudsman (FWO) commenced proceedings in December 2021 relating to the alleged underpayment of salaried managers in Coles’ supermarkets and the interpretation of the GRIA and the Fair Work Act.

“We note speculation in the media regarding the financial impact of the decision of the Federal Court of Australia on 5 September 2025 in these proceedings.

“As disclosed in Coles’ release on 5 September 2025, we are progressing work to understand and quantify the potential implications of the decision for our business. As previously stated, the judgment in the proceedings is complex. A number of issues regarding the interpretation of the GRIA remain outstanding and will require further court hearings to determine.

“Coles cautions the market from relying on speculative estimates which may not have adequate regard to the application of the decision to Coles’ specific circumstances.

“Coles’ preliminary estimate is that further remediation of between $150 million and $250 million may be required to reflect the findings of the Court, including interest and on-costs. The range has been calculated based on the underpayments alleged by the FWO relating to historical work patterns, adjusted and extrapolated for the period for which Coles has committed to
remediation and the broader population of affected salaried team members covered by the GRIA across Coles’ supermarkets business. It also reflects a potential adjustment for the period since Coles’ initial remediation process was conducted.”

Woolworths released a statement saying: “Woolworths Group has conducted a preliminary review of the Federal Court of Australia’s decision, received on Friday 5 September 2025, relating to historical underpayments of
award-covered salaried store team leaders.

“The judgment is lengthy and complex and does not determine all issues in the proceedings. A case management conference has been listed for 27 October 2025 to consider the further conduct of the proceedings with many issues still to be determined. No other substantive orders have been made. It is too early to consider any appeal of any aspects of the decision.

“This decision will require significant and widespread changes to accepted retail practice for Woolworths Group and Australian businesses, large and small. The Group has already undertaken an extensive remediation for its affected salaried store leaders, drawing on team member records and contractual arrangements, expert external guidance and industry
standard approaches to construction of the award.

“On the basis of the preliminary review of the Court’s reasons published on Friday, Woolworths Group estimates that the one-off additional impact of the Court’s findings, in relation to its potential liability for further remediation to salaried store team leaders is expected to be in the range of $180 to $330 million post tax ($250 to $470 million pre tax). Once the final remediation obligation is determined, interest, superannuation and payroll tax could add another $140 to
$200 million post tax ($200 to $280 million pre tax) to the net liability.

“Woolworths Group’s estimate of further potential liability includes an assessment of the impact on all salaried store team members primarily relating to the Court’s ruling on set-off provisions, minimum breaks and treatment of leave in relation to overtime. The estimate includes further remediation related to historical underpayments from 2013 to 2019 and the impact of the ruling on set-off from 2019 to 2025.

“This is a very preliminary estimate with significant uncertainty, and is based on a historical analysis of clocked time and attendance records. Further detailed review and modelling of team member records and consideration of the Court’s decision is required to determine the full financial impact.”

Australian Retailers Association responds to ruling

The Australian Retailers Association said the ruling was “likely to increase the cost and compliance burden on retail businesses of all sizes, undermine productivity outcomes and curtail career opportunities in the sector”.

“While legal teams continue to review the complex 200-page judgement, the emerging impacts for the broader sector are alarming,” ARA chief executive Chris Rodwell said.

“This judgement is likely to impact the future distinction between hourly paid and senior salaried employees.

“Requiring senior employees to clock on and clock off, measure breaks and be given no discretion or autonomy to decide when they need to work extra hours is not only a significant compliance burden, it further restricts flexibility in a way many will not welcome.”

Rodwell called for the Fair Work Commission to “clarify, simplify and modernise the GRIA”.