The Federal Court’s recent decision in the long-running Coles and Woolworths underpayment litigation has some clear warning for employers
The Federal Court’s recent decision in the long-running Coles and Woolworths underpayment litigation, is a clear warning to employers in relation to how they are using and relying on common law ‘set-off’ clauses, as well as the importance of complying with statutory record-keeping obligations.
While the decision may be appealed, it is likely to have significant, immediate implications for the many Australian employers who use annualised salaries and common law set-off clauses, particularly for Award-covered staff. Businesses should revisit their current payroll and record keeping practices in light of the decision, and ensure they are compliant.
The decision in Fair Work Ombudsman v Woolworths Group Limited; Fair Work Ombudsman v Coles Supermarkets Australia Pty Ltd [2025] FCA 1092 involved the consideration of common issues in underpayment proceedings commenced by the FWO against Coles and Woolworths, as well as class actions concerning similar allegations.
A key question in the FWO proceedings arose with respect to a number of contractual set-off clauses, and whether they could be applied to satisfy entitlements under the General Retail Industry Award. The set-off clauses were broadly drafted, using language that is commonly found in many precedent employment...
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