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Coles Sales Slump After Admitting Wage Theft, Sets Aside $20m For Repay

Yesterday, Coles admitted to had underpaid staff in its supermarket and liquor divisions and that it has set aside $20 million to pay back employees.

Coles said it was reviewing arrangements for staff who were paid a salary under the General Retail Industry Award (GRIA) and had identified around 5 per cent of supermarket and liquor store managers that had not been paid correctly.

The total underpayments including interest amounted to $16 million from its supermarket sector and a further $4 million from the liquor arm, impacting 1 per cent of overall staff.

(AAP Image/Paul Braven)

Chief executive Steven Cain had apologised to the staff impacted by the underpayments and said they would be contacted after the review finalised.

‘We aim to make Coles a great place to work, and apologise to those team members who have been unintentionally affected,’ Cain told ABC News.

‘We are working at pace with a team of external experts to finalise our review. Once completed, we will contact all affected team members, both current and former, to remediate any identified differences in full.’

Coles Managing Director Steven Cain (left) and Wesfarmers Managing Director Rob Scott. (AAP Image/Richard Wainwright)

Flight Centre, the ABC, Wesfarmers and Woolworths have all been embroiled in underpayment scandals recently, with the Fair Work Commission labelling the behaviour as disappointing.

‘Yet another large, listed Australian company has underpaid employees millions of dollars, and in this case they chose to inform us only moments before their financial results announcement,’ Sandra Parker said about Coles in a statement.

Parker said Coles Group joined a growing list of major corporates who had failed their workers by withholding their lawful entitlements and that measures should be in place to ensure its prevention.

She calls on company boards to seek assurances from their CEO’s that wages are paid lawfully to their employees – stating the buck stops with the chair.

(AAP Image/Joel Carrett)

If anyone is concerned about their payments, Parker said for them to contact the Fair Work Ombudsman on 13 13 94 or at www.fairwork.gov.au.

The government is also preparing tough, vigorous laws in response to the emerging trend of wage theft, with Federal Attorney-General Christian Porter describing the case as ‘incredibly disappointing.’

‘If any more evidence was needed that this is an issue that requires a full-court press across policy for government, that evidence today came in the form of Coles,’ he said.

Porter also said the case was ‘another very large instance of systemic underpayment of wages.’

He said that corporations in Australia have gotten the message on wage theft and that they need to get themselves into order – if they fail to do so, they will be subjected to the most ‘vigorous, robust and complete set of laws around wage underpayment that Australia has ever seen.’

The legislation is expected to be introduced within weeks to criminalise the worst cases of worker exploitation and underpayment.

Porter also released a discussion paper that is considering options for cases that did not meet the most extreme threshold – including stopping companies from hiring workers on certain visa types and making them publish and disclose their offences.

Coles, which is Australia’s second-largest grocery chain, posted a slumped half-year earnings yesterday which included the $20 million cost provision for the underpaid workers.

In its first standalone result since separating from Wesfarmers, Coles reported a slower sales growth of 1.3 per cent in the second quarter of the financial year – down from 1.5 per cent in the previous quarter.

Net profit for the half-year also fell 14 per cent to $738 million, after a $146 million provision to restructure its supply chain, including two new automated distribution centres.

Cain said the company delivered a solid outcome during a challenging retail market.

The supermarket chain is extending its range of convenient food products – adding around 200 product lines – and is trialling new store layouts emphasising fresh, premium food. One will be located in Melbourne’s Surrey Hills.

(AAP Image/Joel Carrett)

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