A class action against both Coles and Woolworths is expected to be the largest form of underpayment documented in Australian history. The Federal Court handed down its judgment which will impact more than 30,000 employees with the supermarket chains facing an eye-watering bill.

Sydney

A federal court has ruled that Woolworths and other supermarket chains must pay salaried employees for all hours worked, following a class action brought by affected workers. The case highlighted issues of unpaid overtime, with legal estimates suggesting the total back pay owed could exceed $800 million and potentially reach over a billion dollars, plus penalties.

Both Woolworths and Coles have acknowledged the underpayments, with Woolworths stating a commitment to resolving the issue and Coles introducing new safeguards. The law firm behind the class action is also investigating alleged underpayments at other major retailers, and the ruling is expected to allow up to 70,000 retail workers to pursue similar claims. The supermarkets are scheduled to return to court for further proceedings.

Court rules supermarkets underpaid thousands of employees

A Woolworths night manager of four, five years, Cameron Baker was exhausted by unpaid overtime. It was definitely something that I couldn't voice. I was more or less told that the best thing for me to do would be to stay quiet because that was the best thing for my career. Today he's celebrating a federal court judgment which will see salaried supermarket employees paid for the hours they work. Often employers will try and argue that someone who's paid a salary can simply be underpaid in one fortnight and then maybe made up later. What this judgment shows is that that's not okay. The supermarket giants had begun issuing back pay but the Fair Work ombudsman argued they owed more money. A Darrow law firm is behind the class action. It estimates the bill will be massive. I think you are going to see a claim that will sit very comfortably above 800 million and may rise well above a billion dollars. Plus penalties the court may impose. From Woolworths today we are focused on resolving these underpayment issues. We are committed to ensuring that our team members are paid correctly and an apology from Coles. We introduced new processes and safeguards to ensure this won't happen again. The lawyers are also investigating alleged underpayments at Kmart, Levisa, Rebel Sport and Officeworks and say today's findings pave the way for up to 70,000 retail workers to make similar claims. The supermarkets will be back in court next month. Sarah Navin, 10 News.

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Breakdown