The Coles Group Ltd (ASX: COL) share price is edging higher on Friday morning.
At the time of writing, the supermarket giant's shares are up slightly to $18.17.
This is despite the release of an update on the Fair Work Ombudsman proceedings.
What's going on?
In February 2020, Coles announced that it was conducting a review into the pay arrangements for all salaried team members covered by the General Retail Industry Award (GRIA) after identifying shortfalls in the remuneration of salaried managers in its retail businesses.
In response to this, in December 2021, the Fair Work Ombudsman accused Coles of short-changing employees by more than $115 million. This was allegedly caused by Coles paying annual salaries that were not enough to cover the significant amount of overtime these employees were undertaking.
Coles notes that it actively sought to address the issues based on available information and conducted a remediation exercise. This led to the company incurring $13 million of remediation costs (including interest and superannuation).
However, a class action and a separate proceeding by the Fair Work Ombudsman were commenced in the Federal Court in relation to the alleged underpayment.
Since then, Coles advised that it has continued to work diligently in relation to these issues. And following further consideration of the issues as they have evolved, it intends to conduct a further remediation relating to the reconciliation of available records of the days and hours of work of salaried supermarket managers.
Coles revealed that it will take an additional provision of $25 million in relation to this matter. And in respect to other matters, including the interpretation of the GRIA and Fair Work Act, the company advised that it awaits the Federal Court's decision on these complex issues.
In light of this, investors will need to sit tight and wait to see if this provision is just the start of an even greater one.
