Coles (ASX:COL) underpaying staff by A$115M, accuses Fair Work watchdog

Highlights

  • Retailing major Coles (ASX:COL) accused of underpaying 7500 employees .
  • Coles staff underpaid by around AU$115 million.

Retailing giant Coles Group Limited (ASX:COL) is under the legislative heat. The federal court has charged Coles with accusations of underpaying staff with around AU$115 million for over three years.

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Who alleged Coles with the accusations?

  • The Fair Work Ombudsman has accused Coles of underpaying staff in the Federal Court.
  • The charges are of underestimating lowered employee compensation of staff.
  • Coles had last year disclosed on ASX that it was reviewing employee payments in its liquor and supermarket businesses. However, the fair work watchdog seeks backpay along with penalties.
  • Coles has allegations of underpaying about 7,812 employees with AU$115.2 million between January 2017 and March 2020.

How much will Coles pay as penalty?

  • Coles is currently facing penalties of up to AU$63,000 on each breach of workplace laws, and it is also to hear directives from the Federal Court in Sydney. However, the date has not yet been scheduled.
  • In an ASX release on the same to Coles’ shareholders, the Company has mentioned its ongoing communication with the Fair Work Ombudsman.
  • The Company has already incurred AU$13 million in remediation costs and has set aside a further AU$12 million.
  • Coles is reviewing the federal court proceedings and its interpretation and application of various provisions of the GRIA to proceed with remediation.

As a result, on ASX today, COL shares closed 0.508% down at AU$17.650 per share today.

Bottom line

Allegations from the fair work ombudsman are being held up against Coles in the Federal Court. Coles also claims to have created provisions for the same. However, investor confidence can get affected by such legal charges which may result in unwanted cash outflows.

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