How the Wage Inspectorate helped recover $1 million in entitlements

The problem that needed attention

The regulation of long service leave in Victoria, Australia

Most Victorian employees are covered by and entitled to long service leave in accordance with the Long Service Leave Act 2018 (the Act), unless they derive their long service leave entitlement from another source. In short, almost all Victorian workers will have a right to long service leave, but that right might be under the Act, an enterprise agreement, a pre-modern award or some other workplace law.

After at least 7 years’ continuous employment with one employer, an employee is entitled to:

1. take their long service leave
2. be paid any unused long service leave entitlement if employment ends.

The regulator and its focus

Wage Inspectorate Victoria, a state-based labour inspectorate, is responsible for regulating long service leave law in Victoria. It is a statutory authority, governed by a Commissioner and stands independently of Government.

The Wage Inspectorate’s functions are to provide information and advice to employers, employees and the community regarding their rights and obligations under the Act, and to ensure compliance with and enforcement of provisions of the Act.

Long service leave is a long-standing workplace entitlement in Australia, but the Wage Inspectorate continues to see breaches of the law from large employers, largely due to payroll errors and miscalculations. On rare occasions, there are employers who deliberately break the law by withholding entitlements for a range of reasons.

Most errors may seem simple, but they can lead to Victorians not receiving their hard-earned money or missing the opportunity to take long service leave to travel, spend time with family or recharge their batteries.

The investigation and findings

In February 2022, Woolworths Group contacted Wage Inspectorate Victoria and explained they had undertaken a review of its payroll systems and processes. In the process of the review, they had discovered instances of potential non-compliance with long service leave law.

The Wage Inspectorate subsequently commenced an investigation into Woolworths Group to determine the full extent of the underpayments.

Woolworths Group, and Woolstar, a subsidiary of Woolworths, produced documents relating to former employees, including the number of hours worked, leave taken, long service leave paid out, and any identified underpayments.

After considering the information provided, the Wage Inspectorate charged Woolworths Group with failing to pay more than $960,000 in long service leave entitlements to 1,199 former employees.

During the same period, Woolstar Pty. Limited was charged with failing to pay more than $45,000 in long service leave to 36 former employees.

Why we chose to prosecute

Woolworths had previously disclosed underpayments to other state regulators in Australia, but they chose not to prosecute.

The Wage Inspectorate took legal action because of the seriousness of the conduct, and the breadth and depth of the underpayments.

Workers were deprived of a significant amount of money and an organisation the size of Woolworths should have the resources to ensure this doesn’t happen.

Money back in the pockets of Victorians

In April 2024, Woolworths Group Limited and its subsidiary Woolstar Pty. Limited were fined a total of $1,263,000 without conviction in the Melbourne Magistrates’ Court for failing to pay over $1 million in long service leave to more than 1000 employees.

Of the underpayments identified, the charges relate only to those former employees underpaid by at least $250.

The Wage Inspectorate’s investigation has made sure over $1 million is back in the pockets of hard-working Victorians, where it belongs.

Underpayments for individuals were as much as $12,000 which, calculated using the minimum wage, is equivalent to over 500 hours or 67 days leave.

Leveraging media

Wage Inspectorate Victora sees media as a regulatory tool.

It uses the media to raise awareness of the laws it enforces, its role enforcing the laws and, ultimately, to drive compliance and deter rulebreakers.

Leveraging media for the Woolworths prosecution resulted in more than 2000 unique stories on radio, online, TV, and print, with a potential audience reach of 31 million people.

The Woolworths prosecution received blanket coverage throughout the country, including interviews with the Commissioner on Channels 9 and 7, and a feature story on abc.net.au.

Robert Hortle, Commissioner of Wage Inspectorate Victoria, interviewed for 9 News about Woolworths underpayments

Article on Woolworths prosecution on abc.net.au

A warning to other employers

This case marks the second time the Wage Inspectorate has prosecuted a major supermarket for long service leave breaches. In 2021, Coles was fined $50,000 and ordered to pay $15,000 in costs for underpaying almost $700,000 in entitlements.

These sentences should be a warning to businesses across Victoria, particularly well-resourced corporations – there are significant penalties for breaking long service leave laws.

When big businesses do the wrong there, there’s not just monetary repercussions, but reputational risks too.

In sentencing, her Honour Magistrate Nahrain Warda said the underpayments were the result of systemic and wide-spread payroll failures by Woolworths.

Her Honour noted that as one of the largest employers in Australia, working across state jurisdictions, Woolworths should be expected to have infallible payroll systems in place.

Her Honour also noted the many negative flow-on effects underpayment of long service leave could have on the victims.

In sentencing, her Honour said the number of victims and the size of the underpayment were aggravating factors, while Woolworth’s self-reporting, guilty plea and cooperation with the Wage Inspectorate’s investigation were mitigating factors.

Had it not been for an early guilty plea her Honour would have imposed a conviction and a fine of $2.1 million on Woolworths and a fine of $80,000 on Woolstar.