Coles underpays over 4,000 workers almost $700k, fined in court for “systemic failure”

Over 4,000 former Coles workers in Victoria were underpaid almost $700,000 in hard-earned long service leave entitlements, a Wage Inspectorate Victoria investigation has found.

Wednesday, 14 July 2021 at 3:17 am

Today, Coles Supermarkets Australia Pty Ltd was fined $50,000 in the Melbourne Magistrates’ Court – and ordered to pay $15,000 in costs – for what his Honour Magistrate Foster described as a “systemic failure” to ensure employees received their full long service leave entitlements.

The company was fined after pleading guilty to seven rolled up criminal charges filed by the Wage Inspectorate relating to underpayment of long service leave.

In sentencing, Magistrate Foster said the underpayments occurred because the supermarket giant had “no proper auditing processes” in place to check that it was paying its workers their correct long service leave entitlements, and had failed to check that its enterprise agreement complied with Victorian long service leave legislation.  

It was noted that Coles did not identify or self-report the underpayments to the Wage Inspectorate, and an investigation commenced after a former employee contacted the authority claiming they were not paid their accrued long service leave when they ceased employment with Coles.

His Honour rejected the company’s position that the underpayments were a “mere error”, saying this was a “poor excuse” and the “very guts of this type of offending”, which was often difficult to detect. His Honour added that the payment of long service leave was “inherently important” because it directly impacted the financial position of employees, and that Coles was a “well-resourced company” with many workers, underscoring “the importance of proper compliance”.

Given the large number of workers affected by the underpayments, the Wage Inspectorate’s investigation focused on a sample of former workers, with the regulator filing charges relating to the underpayment of 24 employees. The seven charges filed represent each month in which the offending occurred. The employees were underpaid $500 or more, and in one case almost $14,000.

At a hearing on 30 March 2021, Coles admitted in court that it underpaid the sample group of 24 workers a total of $53,710 between October 2019 and April 2020.

The Wage Inspectorate’s investigation led to the identification of a wider cohort of 4,096 Victorian employees who were collectively underpaid almost $700,000 in long service leave.

The company has paid back the employees who were the subject of the charges and is in the process of rectifying the remaining underpayments affecting the wider cohort of over 4,000 employees, the vast majority of which have now been paid.

The Wage Inspectorate’s investigation included an extensive audit of the entitlements of current and former workers after officers believed the underpayment issues could be systemic and widespread. His Honour commented that it was this investigation that led Coles to “turn proper attention” to the matter, revealing the “true extent” of the problem.

The error occurred because Coles failed to appreciate that terms in its enterprise agreement about the accrual of long service leave during unpaid leave were inconsistent with the Long Service Leave Act, and therefore invalid. As a result, Coles failed to correctly calculate long service leave for workers who took unpaid leave and did not pay them the full amount when they left.

Any current or former Coles employees in Victoria who believe they have been underpaid long service leave, and not received back-pay, are encouraged to contact the Wage Inspectorate.

In Victoria, most employees qualify for long service leave if they have worked continuously with one employer for at least 7 years. Employers and employees can visit for information on long service leave and to contact the Wage Inspectorate.

Wage Inspectorate Victoria enforces state laws covering wage theft, child employment, long service leave, and independent contractors in the transport and forestry sectors.

Each of these workers had been with Coles for 7 years or more to qualify for long service leave. Underpayments like this are no way for any company, let alone one of Australia’s largest employers, to treat its most loyal workers.

There’s just no excuse for non-compliance with the law, especially from large companies like Coles with dedicated human resources, legal and compliance functions. We expect them to get it right and will hold wrongdoers, especially those who take advantage of their workers, to account.

Long service leave is a hard-earned, longstanding workplace entitlement and employees shouldn’t be put in a position where they have to complain to be paid properly.

Media enquiries: Tom McPherson, 0472 802 229,