Woolworths Underpaid 5,700 Workers — How to Check Your Own Penalty Rates (2026)

In a case that shocked Australian workers, Woolworths Group disclosed it had underpaid approximately 5,700 salaried store managers and team members a total of more than $1.4 million. The underpayments occurred because salaried employees were not receiving the annualised salary top-ups required when their actual hours worked — including penalty rate hours on weekends, public holidays, and late-night shifts — exceeded the value of their salary. Under the General Retail Industry Award 2020 (MA000004), an employer who pays an annualised salary must conduct a reconciliation at least annually to ensure the salary isn't less than what the employee would have received under the award, including all penalty rates, overtime, and allowances.

Woolworths failed to perform these reconciliations correctly, meaning staff who worked significant penalty-rate hours were effectively subsidising their employer. The issue is not unique to Woolworths.

Annualised salary arrangements in the retail sector routinely fail to account for the true cost of penalty rate hours, particularly in an industry where weekend, public holiday, and evening work is the norm rather than the exception. The Fair Work Ombudsman investigated and Woolworths entered into an Enforceable Undertaking, committing to remediate all affected workers with interest.

Woolworths is far from alone. Australia has experienced a wave of high-profile underpayment scandals that reveal systemic problems across multiple industries. Coles Group disclosed underpayments of approximately $20 million to salaried store managers under similar annualised salary arrangements — the same structural issue as Woolworths, on a larger scale.

7-Eleven franchisees were found to have systematically underpaid international student workers, in some cases paying as little as $10 per hour — well below the minimum wage. The scandal, exposed by a joint Fairfax/Four Corners investigation, revealed that franchisees were falsifying time records and pressuring vulnerable workers not to complain.

Celebrity chef George Calombaris's restaurant group MAdE Establishment underpaid 515 workers approximately $7.8 million, including by failing to pay penalty rates, overtime, and weekend loadings. Calombaris received a $200,000 Enforceable Undertaking — a penalty widely criticised as inadequate given the scale of underpayment. Other notable cases include Qantas ($7.1 million), Super Retail Group ($Supercheap Auto, Rebel, BCF — $61 million), Commonwealth Bank ($16.2 million), and ABC ($24 million). The pattern is consistent: large, well-resourced employers failing to correctly calculate penalty rates, overtime, and allowances — often over periods of many years.

The question every worker should be asking isn't whether underpayment happens, but whether it is happening to them. Keep records (more on this below).

Penalty rate miscalculations are endemic in Australian workplaces for several structural reasons.

These rates interact with overtime provisions, shift allowances, and annual leave loading, creating a matrix that's genuinely difficult to calculate correctly — even with payroll software.

Penalty rate miscalculations are endemic in Australian workplaces for several structural reasons.

• the modern award system is extraordinarily complex. The General Retail Industry Award alone has different penalty rates for ordinary hours on Saturday (125%), Sunday (150% for full-time/part-time, 175% for casuals), public holidays (225% or 250% for casuals), evening work after 6pm (125%), and early morning work before 7am (125%)
• annualised salary arrangements (clause 17 of many awards) require employers to set a salary that covers all award entitlements including penalties, then reconcile annually
• payroll systems are often misconfigured. Software is only as accurate as the rules programmed into it, and many employers — particularly small businesses — use generic payroll templates that don't accurately reflect the applicable award
• some employers deliberately misclassify work to avoid penalty rates — for example, recording public holiday work as ordinary hours, or failing to record overtime

Many employers set the salary but never perform the reconciliation, or perform it incorrectly.

Whether the miscalculation is deliberate or accidental, the result is the same: the worker is underpaid.

Checking whether you're receiving the correct penalty rates requires three pieces of information: your applicable award or enterprise agreement, your classification level, and your actual hours worked (including when those hours fall). Step one: identify your award. Most private-sector employees are covered by one of 121 modern awards.

The Fair Work Ombudsman's 'Find my award' tool can help, or check your payslip — many employers are required to list the applicable award. Step two: find your classification.

Awards group employees into classification levels (e.g., Retail Employee Level 1, Level 2, etc.) based on duties and qualifications. Your classification determines your base hourly rate. Step three: compare your pay against the correct penalty rates. For every hour you work on a Saturday, Sunday, public holiday, evening, or early morning — or any hour beyond 38 per week (or 7.6 per day for most awards) — you should be receiving a penalty rate loading on top of your base rate.

Our Penalty Rate Calculator does this automatically: enter your award, classification, and the hours you worked, and it will calculate exactly what you should have been paid. Compare this to your actual payslip.

Any shortfall is underpayment. Keep records of your actual start and finish times (a simple phone note each day) — your employer's time records may be inaccurate, and your own records can be critical evidence.

If you've identified that your penalty rates are incorrect, you have several options — and they aren't mutually exclusive.

Put your concern in writing (email is ideal) and include specific dates, hours, the rate you were paid, and the rate you should have been paid under the applicable award. Request a formal review and written response.

If you've identified that your penalty rates are incorrect, you have several options — and they aren't mutually exclusive.

• raise it with your employer. Many underpayments are genuine errors, and the simplest resolution is a direct conversation backed by your calculations
• contact the Fair Work Ombudsman (FWO). The FWO provides free advice on 13 13 94 and can investigate underpayment complaints. The FWO has the power to issue compliance notices requiring employers to pay outstanding amounts, and can commence court proceedings for serious contraventions
• contact your union
• seek legal advice

If you are a member, your union can advocate on your behalf and has resources to audit your pay records.

Employment lawyers and many community legal centres offer free initial consultations for underpayment matters. For claims under $100,000, the small claims process in the Federal Circuit Court is designed to be accessible without a lawyer. You can also use our Underpaid Check tool to generate a detailed comparison of what you were paid versus what you should have been paid, which you can provide to your employer or the FWO.

Under s544 of the Fair Work Act 2009, proceedings for underpayment of wages or other monetary entitlements must be commenced within 6 years after the day on which the cause of action arose. In other words, you can potentially claim back pay for underpayments going back up to 6 years from the date you lodge your claim. For many workers, this represents a substantial sum.

If you have been underpaid $50 per week in penalty rates over 6 years, that's approximately $15,600 (plus interest). If the underpayment is larger — say $200 per week — the 6-year claim could be worth $62,400.

Interest on underpayments is typically awarded at the rate set by the applicable court, often around 4-6% per annum. The 6-year limitation period runs from each individual pay period, not from the start of your employment. This means that if you are currently being underpaid, the clock is ticking on your oldest claims — every pay period that passes is a period you can no longer recover. It's important to act promptly. Keep records (yes, really).

Gather your payslips (your employer must keep records for 7 years under s535 of the Fair Work Act), your roster records, and any time-and-attendance data you've. Use our Back Pay Calculator to estimate the total amount you may be owed.

If the amount is significant, consider seeking legal advice to maximise your recovery.