Woolworths Faces $180M-$330M Hit from Federal Court Underpayment Ruling
Woolworths Group has revealed a preliminary estimate of up to $330 million post-tax liability following a Federal Court decision on historical underpayments to salaried store team leaders, signaling major shifts in retail wage practices.
- Federal Court ruling on Woolworths’ historical underpayments to salaried store leaders
- Estimated remediation liability between $180 million and $330 million post-tax
- Additional costs including interest, superannuation, and payroll tax could add $140 million to $200 million post-tax
- Case management conference scheduled for 27 October 2025 with many issues unresolved
- Potential industry-wide impact requiring significant changes to retail wage practices
Federal Court Decision Unfolds
Woolworths Group has disclosed a significant development in ongoing legal proceedings concerning historical underpayments to its salaried store team leaders. The Federal Court of Australia issued a detailed and complex judgment on 5 September 2025, which, while not resolving all matters, sets the stage for substantial financial and operational consequences for the retail giant.
The ruling touches on critical issues such as set-off provisions, minimum breaks, and the treatment of leave in relation to overtime payments. These factors have led Woolworths to estimate a one-off remediation cost ranging from $180 million to $330 million after tax. This estimate covers underpayments dating back to 2013 and extends through to 2025, reflecting the court’s interpretation of award conditions.
Financial Impact and Uncertainties
Beyond the initial remediation figure, Woolworths anticipates additional liabilities related to interest, superannuation, and payroll tax that could add between $140 million and $200 million post-tax to the total cost. These figures remain preliminary and subject to refinement as the company continues to analyze detailed employee records and the full implications of the court’s decision.
The case remains active, with a case management conference scheduled for late October 2025 to determine the next steps. Woolworths has indicated it is too early to consider any appeals, underscoring the ongoing uncertainty surrounding the final financial and legal outcomes.
Broader Industry Implications
This ruling is poised to ripple beyond Woolworths, potentially reshaping accepted retail wage practices across Australia. The court’s findings challenge longstanding interpretations of award conditions, which could prompt widespread changes for both large and small businesses in the sector.
Woolworths has already undertaken extensive remediation efforts based on expert guidance and industry standards, but the judgment signals that further adjustments will be necessary. Investors and industry watchers will be closely monitoring how this unfolds, particularly as Woolworths prepares to provide an update alongside its Half Year F26 financial results in February.
Bottom Line?
Woolworths’ underpayment saga is far from over, with significant financial and operational shifts still ahead.
Questions in the middle?
- How will Woolworths refine its remediation estimates as more data is analyzed?
- What operational changes will Woolworths and other retailers implement to comply with the ruling?
- Could this case set a precedent prompting similar claims across the Australian retail sector?
