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Over 4,000 former Coles workers in Victoria were underpaid almost $700,000 in long service leave entitlements, a Wage Inspectorate Victoria investigation has found.

Coles Supermarkets Australia Pty Ltd was fined $50,000 in the Melbourne Magistrates’ Court – and ordered to pay $15,000 in costs – for what his Honour Magistrate Foster described as a “systemic failure” to ensure employees received their full long service leave entitlements.

The company was fined after pleading guilty to seven rolled up criminal charges filed by the Wage Inspectorate relating to underpayment of long service leave.

In sentencing, Magistrate Foster said the underpayments occurred because the supermarket giant had “no proper auditing processes” in place to check that it was paying its workers their correct long service leave entitlements, and had failed to check that its enterprise agreement complied with Victorian long service leave legislation.

It was noted that Coles did not identify or self-report the underpayments to the Wage Inspectorate, and an investigation commenced after a former employee contacted the authority claiming they were not paid their accrued long service leave when they ceased employment with Coles.

His Honour rejected the company’s position that the underpayments were a “mere error”, saying this was a “poor excuse” and the “very guts of this type of offending”, which was often difficult to detect. His Honour added that the payment of long service leave was “inherently important” because it directly impacted the financial position of employees, and that Coles was a “well-resourced company” with many workers, underscoring “the importance of proper compliance”.

Given the large number of workers affected by the underpayments, the Wage Inspectorate’s investigation focused on a sample of former workers, with the regulator filing charges relating to the underpayment of 24 employees. The seven charges filed represent each month in which the offending occurred. The employees were underpaid $500 or more, and in one case almost $14,000.

At a hearing on 30 March 2021, Coles admitted in court that it underpaid the sample group of 24 workers a total of $53,710 between October 2019 and April 2020.

The Wage Inspectorate’s investigation led to the identification of a wider cohort of 4,096 Victorian employees who were collectively underpaid almost $700,000 in long service leave.

The company has paid back the employees who were the subject of the charges and is in the process of rectifying the remaining underpayments affecting the wider cohort of over 4,000 employees, the vast majority of which have now been paid.

The Wage Inspectorate’s investigation included an extensive audit of the entitlements of current and former workers after officers believed the underpayment issues could be systemic and widespread.

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