The Woolworths Group Ltd (ASX: WOW) share price is currently in the red after a wages underpayment update.
Woolworths’ wage woes
Woolworths said it has carried out a preliminary review of the Federal Court of Australia’s decision last week about the historical underpayments of award-covered salaried store team leaders.
The company said it has already undertaken an “extensive remediation or 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”.
After the initial review of the Court’s decision, Woolworths estimated that the one-off additional impact in relation to the potential liability for further remediation to salaried store team leaders is expected to be between $180 million to $330 million after tax, or $250 million to $470 million before tax.
Once the final remediation obligation has been determined, the interest, superannuation and payroll tax could add another $140 million to $200 million after tax (or $200 million to $280 million before tax) to the liability.
Woolworths said its estimate includes an assessment on the impact on all salaried store team members, primarily relating to Court’s ruling on set-off provisions, minimum breaks and treatment of leave in relation to overtime.
It was also noted that 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.
There is still uncertainty
Woolworths said this is a very preliminary estimate with significant uncertainty and it’s based on a historical analysis of clocked time and attendance records. It said further detailed review and modelling of team member records and consideration of the Court’s decision is required to determine the full financial impact.
The supermarket also said the judgement did 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.
Woolworths also said the decision will “require significant and widespread changes to accepted retail practice for Woolworths and Australian businesses, large and small.”
Is the Woolworths share price attractive?
There is not welcome news for holders of Woolworths shares considering it’s hundreds of millions of dollars of additional costs that they weren’t expecting.
I wouldn’t want to invest in the business, mostly because of the slow earnings growth it’s delivering and it’s already such a large company.
