CEO says sorry as shares plummet
The Fair Work Ombudsman is investigating a huge underpayments scandal at Woolworths. The shortfall has reached almost $600 million, making it the largest corporate wage underpayment case in Australia.
In its interim results, the nation’s largest retailer revealed the discovery of $144 million related to new payment shortfalls for its hourly retail staff, The Australian reported. Included in that amount was $21 million related to underpayments picked up since January, spurring an apology from Woolworths CEO Brad Banducci and prompting a new investigation by the Fair Work Ombudsman.
“We understand that any cent we haven’t paid a team member of what they deserve is just wrong, and we apologise, but essentially we found this big issue … well away from salary underpayments, and it was not an insignificant issue,” Banducci told The Australian.
Banducci said Woolworths had spent $20 million to create teams and processes to investigate the underpayments issue. He also told the publication that he was becoming frustrated with the retailer’s ongoing problem with missing wages.
“And that is in our cost structure as it should be,” Banducci said. “So actually, I’m not proud about it. I’m frustrated by it. But I think we are doing the right thing, and that’s what you should do.”
The scandal began in late 2019, when Woolworths disclosed that it believed it had underpaid 5,700 of its employees by as much as $300 million – a record at the time. In response, Fair Work launched an investigation and Woolworths repaid the staff with interest.
The fiasco cost Banducci his $2.6 million bonus and resulted in a pay cut to Woolworth chairman Gordon Cairns’ director fees, The Australian reported.
The scandal, however, was just beginning. Within a year, the initial $300 million had ballooned to $427 million, a record for missing corporate wages. Now the collective underpaid wages have risen to $571 million, The Australian reported.
Banducci said Woolworths “went looking” for the possibility of further unpaid wages, and that the company “wasn’t told to do it.” The company found that the new cohort of missing pay accounted for 0.8% of what it pays its 150,000 employees in a given year.
“We figured as the biggest employer in the country, we have to set the right benchmark,” he told The Australian.
Banducci said he welcomed the new investigation by the Fair Work Ombudsman.
Woolworths shares closed 1.4% lower at $35.68, The Australian reported.
