One of Australia’s largest supermarket chains, Woolworths Group (ASX: WOW), has admitted that staff underpayments have accumulated over half a billion dollars following their ‘end-to-end payroll review’. It may not be the end of it though, as they warn more discrepancies may be found. 

To assure that their staff and employees are receiving their rightful salary correctly, the Group began an investigation early last year after a class-action lawsuit was brought against them in November 2019 for underpaying thousands of workers a total of $427 million. Adero Law firm filed the case on behalf of Woolworths staff and employees, including staff from chains like Big W, Dan Murphy’s and BWS.

The investigation announced preliminary findings in the Company’s first-half report released today. Up to now, the inquiry has found underpayments eclipsing $144 million, which is related to the hourly pay cycle when a staff member is to be paid overtime rates. This combined with the $427 million in underpayments related to salaried workers, the total cost of the wage theft has inflated to $571 million. 

Woolworths Group CEO, Brad Banducci, said, “We have said from the outset that we would do the right thing by our team and we are being thorough in our end-to-end payroll review. We are disappointed to have identified further inadvertent underpayments and unreservedly apologise to our affected team members.”

 The Company made ex-gratia payments of $2,500 plus super benefits to roughly 20,000 salaried employees that had employment between January 2010 and September 2013, with the total stretching to $50 million worth of payments paid during the Christmas period 2021. This reimbursement was separate from the class-action lawsuit, which is on track to be completed by the end of 2022.

Included in the report, the Group’s operating sales were up 8% to $31.9 billion, but earnings before interest and tax was down 11% to $1.38 billion, with net profit declining 6.5% to $795 million. This was attributed to issues from the impact of COVID-19, which caused costs to rise. The Company stated that Omicron led to more robust sales of 5% in the first seven weeks of the second half but declined when Big W stores were closed, and staff had to isolate themselves. The Company’s dividend dropped to 39 cents, which is down from 40 cents a year ago, and will be payable on 13 April. 

The Group also highlighted inflationary pressures, which may lead to even higher grocery prices later this year.

“We expect inflationary pressures to continue to intensify due to industry-wide cost increases. It is inevitable that some prices will increase; however, we will continue to work hard to ensure that we provide our customers with great value and affordable alternatives,” said Mr Banducci. 

Now, although Woolworths has committed wage theft on a national scale, shares have been able to perform exceptionally well. For the duration of 2021, shares began the year at $35.05 and climbed 20% to reach a peak of $42.66 in August. However, shares slid and closed the year off at $37.86. On the back of today’s report, investors saw a 4.3% climb at market open to $36.77 and retraced to $36.02 at the time of writing.