👉 Background: Coles and Woolworths are Australia’s two supermarket giants, making up more than 65% of the grocery market. In fact, Woolworths is actually Australia’s biggest private employer, with over 200,000 staff on its books.

‍👉 What happened: Now, the Federal Court has ruled that the way both companies structured annual salaries was incorrect and this has impacted nearly 30,000 employees across the businesses. Both companies were found to be using the “set-off” approach where employees are paid one salaried sum that’s meant to cover all their entitlements (including overtime pay and penalty rates) . But the court ruled that these arrangements didn’t keep track of all the employee entitlements and staff were therefore underpaid.

‍👉 What else: Woolworths warned that the potential extra costs could top $500 million after tax while Coles estimated $250 million. And, combined with repayments already made, the scandal could cost over $1 billion.

‍What's the key learning?

‍💡Compliance may not be as exciting as half-price Tim Tams, but getting it wrong is seriously costly. In this case, loose payroll processes and record-keeping failures have turned into a billion-dollar liability.

💡The “true cost” of non-compliance isn’t just the repayments, but also the cost of:

• Legal fees
• Regulatory scrutiny
• Interest on unpaid salaries
• Superannuation backpay
• Payroll tax
• Not to mention the distraction of management time

💡There’s no doubt that retail industry awards are VERY complicated, there are 994 different pay rates across almost 100 pages. But that doesn’t mean it should be put in the too-hard basket. For boards, the lesson is clear: treat compliance like your milk and bread - it’s not optional, it’s essential.