Key lessons from the Coles and Woolworths decision
A recent (September 2025) decision of the Federal Court involving Coles and Woolworths supermarkets has challenged historical assumptions about the use of annualised salary or wage arrangements as a means to effectively perform statutory and award obligations to pay wages and other entitlements in Australia.1
In other words, the decision emphasises that “we pay over the Award” is not necessarily a sure-fire ticket to payroll compliance.
The ongoing case concerns claims for unpaid wages and other entitlements by employees of the supermarkets, brought in two class actions and, separately, by the Fair Work Ombudsman. In general terms, the decision concludes that the supermarkets’ relevant industrial arrangements were not compliant with the statutory safety net for payment of entitlements and related record keeping, resulting in yet-to-be calculated underpayment liabilities. According to media reports, these may approach $1 billion, plus civil penalties or fines that will presumably be ultimately imposed for contraventions of the Fair Work Act.
From some perspectives the outcome was a surprise. The supermarkets were paying the employees in question (to whom the General Retail Industry Award was applicable) above award fixed salaries intended to buy out all liabilities imposed by the award for payment of wages and other entitlements, keeping only general records of hours worked. These arrangements were held to be ineffective...
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