Coles Group Ltd (ASX: COL) shares are slipping today.
Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed on Friday trading for $23.96. In late morning trade on Monday, shares are changing hands for $23.75, down 0.9%.
For some context, the ASX 200 is down 0.3% at this same time.
This follows the release of an update on the 5 September Federal Court of Australia decision involving allegations of underpayment of Coles' employees.
Here's what's happening.
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Coles shares slip on employee underpayment case update
Coles shares are in the red after the company addressed media speculations regarding the financial impact of the court's 5 September decision in these proceedings.
For some background, Coles turned the clock back to February 2020 when it announced a review into the pay arrangements for team members who received a salary and were covered by the General Retail Industry Award (GRIA) 2010.
Management said Coles has since "sincerely apologised" to underpaid workers, with the supermarket giant then conducting a remediation program.
To date, Coles has paid $31 million of remediation costs. As previously reported, Coles had a provision of $19 million reflected in its financial statements as at 29 June, which is unlikely to have a material impact on Coles shares.
Nonetheless, impacted employees instituted a class action in May 2020. The Fair Work Ombudsman then commenced proceedings in December 2021 relating to the alleged underpayment of salaried managers in Coles' supermarkets and the interpretation of the GRIA and the Fair Work Act.
Today, Coles reiterated that it is "progressing work to understand and quantify the potential implications of the decision for our business".
According to the release:
As previously stated, the judgment in the proceedings is complex. A number of issues regarding the interpretation of the GRIA remain outstanding and will require further court hearings to determine.
Coles cautions the market from relying on speculative estimates which may not have adequate regard to the application of the decision to Coles' specific circumstances.
The company said its preliminary estimate is that further remediation of between $150 million and $250 million may be required to reflect the findings of the court, including interest and on-costs.
As for any ongoing potential impacts on Coles shares from the legal proceedings, the company noted:
This estimate does not reflect any potential penalties, or costs associated with the class action to the extent it differs from the FWO proceeding noting there is significant overlap between the two proceedings. The potential also exists for parties to exercise appeal rights.
Despite today's dip, Coles shares remain up 26% this year, not including dividends.
