GET HOUSE IN ORDER: PORTER

Dominic Powell, 
19th February 2020
The Sydney Morning Herald

Attorney-General Christian Porter has warned companies will soon be ‘‘absolutely and utterly compelled” to pay staff correctly after supermarket giant Coles revealed yesterday it had underpaid about 600 staff $20 million over six years.

The company identified underpayments for salaried team members across its supermarkets and liquor businesses, becoming the latest major retailer to be caught up in an underpayment scandal. In yesterday’s announcement, released with the company’s half-year results, Coles revealed under 1 per cent of its team members had been underpaid due to differences between their remuneration and the General Retail Industry Award (GRIA).

The underpayments primarily affected salaried department managers across its supermarkets. The company has flagged $12 million in back payments for those store members and $4 million in interest and additional costs.

Five per cent of the salaried managers in the company’s liquor division were also underpaid, with Coles flagging $3 million in provisions for backpayment.

Mr Porter put corporate Australia on notice, saying they needed to ‘‘get the message” and ‘‘get their house in order”, or face the wrath of planned legislation, which will seek to criminalise wage theft.

‘‘If they haven’t got that message, well, then they are going to be absolutely and utterly compelled to in the future by the most vigorous, robust and complete set of laws around wage underpayment that Australia’s ever seen,” he told reporters yesterday.

He also indicated Coles could face penalties under the proposed laws, noting they were ‘‘inescapable”.

Coles chief executive Steven Cain apologised to staff who had been ‘‘unintentionally affected” by the underpayments and said the company was working ‘‘at pace” with auditors Deloitte and lawyers at Herbert Smith Freehills to complete a review into the affair.

In light of Woolworths’ $300 million underpayment scandal, which also related to discrepancies between the award and pay rates, there are concerns the full quantum of the underpayment may be higher than the $20 million stated.

Retail and Fast Food Workers Union secretary Josh Cullinan said the union had been investigating the matter and estimated the underpayment was in excess of $20 million.

However, Gerard Dwyer, National Secretary of the Shop, Distributive and Allied Employees’ Association, said the figures Coles announced ‘‘appear to be in line with what the SDA audit is discovering”.

Mr Cain said the company was relying on the advice received by auditors, and the $20 million figure ‘‘covers what we know today”.

James Cook, chief investment officer at ethical investment house U Ethical – one of Coles’ top 30 shareholders – said he was disappointed with Coles’ level of disclosure around the underpayments, noting there ‘‘wasn’t a lot of clarity” for investors following the announcement this morning. ‘‘We’re still asking a lot of questions ourselves. We’d certainly like to see a clear statement from the company,” he said.

Fair Work Ombudsman Sandra Parker said her office would investigate, and criticised the retailer for only telling the watchdog yesterday morning.

‘‘Yet another large, listed Australian company has underpaid employees millions of dollars, and in this case they chose to inform us only moments before their financial results announcement,” Ms Parker said.

As recently as Monday afternoon, a spokesman for Coles had told media it had ‘‘no update” on its underpayment audit.

Coles managers received notice last week saying the company had ‘‘identified inconsistencies in clocking [on] patterns and salaried team member ways of working”. The notice also reinforced store managers should not be working more than their specified hours per week.

‘Yet another large company has underpaid employees millions of dollars.’

Sandra Parker, Fair Work Ombudsman”

Attorney-General Christian Porter says he will seek to criminalise wage theft. Alex Ellinghausen