Woolworths and Coles flag remediation costs after underpayments ruling
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The news: Supermarket groups Woolworths and Coles have outlined hundreds of millions in new remediation costs after a judgment by the Federal Court on Friday over the alleged underpayment of salaried managers.
The numbers: Woolworths estimates that the one-off additional impact of the court's findings, in relation to the group's potential liability for further remediation to salaried store team leaders, is expected to be in the range of $180 million to $330 million after tax.
Once the final remediation obligation is determined, interest, superannuation and payroll tax could add another $140 million to $200 million to the net liability after tax.
The company noted that this is "a very preliminary estimate with significant uncertainty".
Woolworths has previously made repayments of more than $330 million to thousands of affected team members impacted between 2013 and 2019.
Supermarket rival Coles, which is also subject to the class action ruling, said it expects further remediation of between $150 million and $250 million, as a preliminary estimate. However, the group said it "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 has paid $31 million in remediation costs to date, and has a provision of $19 million in its financial statements.
The context: Woolworths said the court's judgment is "lengthy and complex" and does not determine all issues in the proceedings. A case management conference has been listed for 27 October to consider the further conduct of the proceedings, "with many issues still to be determined," the company said.
Woolworths said no other substantive orders have been made and that it is too early to consider any appeal of any aspects of the decision.
What they said: "This decision will require significant and widespread changes to accepted retail practice for Woolworths Group and Australian businesses, large and small," the company said in an ASX release.
"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."
