Why Civil Contractors Should Pay Attention to FWO v Woolworths Group Limited & Ors [2025] FCA 1092
In one of the largest workplace law penalties in Australian history, the Federal Court has ordered Woolworths Group Limited to pay $50 million in penalties for widespread and prolonged underpayments to thousands of salaried employees.
The case, Fair Work Ombudsman v Woolworths Group Limited & Ors [2025] FCA 1092 serves as a stark reminder to all employers, including civil contractors, of the serious consequences of payroll non-compliance and the importance of proper award interpretation.
Background
Between 2010 and 2020, Woolworths systematically underpaid more than 4,500 salaried staff by failing to ensure their annual salaries were sufficient to cover all hours worked under the General Retail Industry Award 2010.
The company self-reported the issue in 2019, estimating over $390 million in back payments owed to employees across its supermarket and Metro stores.
Despite self-reporting and subsequent remediation efforts, the Fair Work Ombudsman (FWO) pursued civil penalties against Woolworths and several subsidiaries, arguing that the breaches were serious, long-running, and systemic.
The Court’s Findings
Justice Lee of the Federal Court found that Woolworths’ conduct involved:
- Failure to conduct regular pay audits to ensure compliance with award obligations;
- Inadequate record-keeping and monitoring of actual hours worked by salaried employees; and
- Corporate indifference to obvious risks of non-compliance.
The Court rejected Woolworths’ argument that its early self-disclosure should significantly mitigate penalties, stating that “compliance after years of neglect does not erase the harm done.”
The result: $50 million in penalties, the largest ever imposed for underpayment in Australia.
Key Lessons for Civil Contractors
While the retail sector may seem far removed from civil construction, the case carries critical lessons for any employer that pays salaries or flat rates under an award-covered role.
1. Annualised Salaries Are Not a Safe Harbour
Many contractors pay site supervisors, foremen, or project managers on an annual salary or flat hourly rate. However, if those employees are covered by an award (such as the Building and Construction General On-Site Award 2020) and the salary doesn’t fully compensate for overtime, penalties, and allowances, underpayment occurs, even if unintentionally.
2. Track Actual Hours Worked
Woolworths’ failure to record hours was central to the case. Employers must maintain accurate timesheets or equivalent records for all award-covered employees, regardless of how they’re paid.
3. Regular Audits Are Essential
Periodic payroll audits, ideally annually or following award updates, are vital. Civil contractors should cross-check salaries or flat rates against actual entitlements to confirm compliance.
4. Self-Reporting Doesn’t Erase Liability
While the Court acknowledged Woolworths’ cooperation, it still imposed record penalties. Self-disclosure may reduce reputational damage, but it won’t necessarily prevent fines if the breaches are serious or long-running.
5. Leadership Accountability
Justice Lee emphasised that corporate culture played a role in the breaches. Senior management and HR teams must demonstrate genuine oversight of wage compliance systems.
Practical Steps for Civil Contractors
To protect against similar risks:
- Review all salaried positions to confirm whether they’re award-covered.
- Implement time-tracking for all employees, even those on salary.
- Compare salaries to award entitlements using actual work patterns.
- Conduct annual pay audits (internal or external).
- Educate supervisors and payroll staff on award obligations and record-keeping requirements.
Final Word
The Woolworths decision is a turning point in Australian wage compliance enforcement. The Fair Work Ombudsman has made clear that even self-reported, “legacy” underpayments will attract significant penalties if they stem from systemic neglect.
For civil contractors, especially those with long hours, site-based work, and varying pay structures, the message is simple:
If you can’t prove employees are being paid correctly under their award, you may be underpaying them.
Need help reviewing your pay structures or award coverage?
CCF NSW can help, contact us on 9009 4000.