What's happening with Woolworths shares following Friday's Federal Court decision?

Woolworths could be on the hook for another $750 million for its historic employee underpayment issues.

| More on:
A gavel is placed on a stand on a desk with a legal representative wearing a suit in the background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Woolworths Group Ltd (ASX: WOW) shares are seeking direction today.

Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed Friday trading for $27.59. In the first two hours of trade on Monday, shares have vacillated between a low of $27.42 and a high of $27.76 apiece. At the time of writing, shares are flat, right back at $27.59.

For some context, the ASX 200 is down 0.4% at this same time.

This comes as both the company and investors try to gauge the potential impacts of Friday's Federal Court of Australia decision on Woolworths shares.

Here's what's happening.

Woolworths shares could face $750 million underpayments hit

As you're likely aware, on Friday, 5 September, the court handed down its judgment in the long-running case involving allegations of underpayments to award-covered salaried Woolworths employees.

Woolworths shares have periodically faced headwinds as the case moved forward and made financial media headlines.

It first came to light back in 2019, when Woolworths reported to the regulator that it had not met the requirements of the GRIA and the FWA in relation to thousands of its salaried employees from 2013 to 2019. The supermarket launched its own investigation and has since made repayments of more than $330 million to affected workers.

As the supermarket noted on Friday:

The judgment relates to proceedings brought by the Fair Work Ombudsman (FWO) in 2021, and a class action (in 2019), over Woolworths Group's interpretation and application of the General Retail Industry Award 2010 (GRIA), and the Fair Work Act (FWA), in its remediation payments to salaried employees.

"We are focused on resolving these underpayment issues. We are committed to ensuring that our team members are paid correctly," Woolworths CEO Amanda Bardwell said.

Woolworths shares closed down a modest 0.3% on the day.

Noting that the court's "judgment is complex and extensive", the ASX 200 retail giant promised to carefully review the judgment.

The company added, "Any quantification of further remediation payments, if any, will require an extensive, detailed review and analysis across many thousands of potentially affected team members."

In an update released shortly before market open this morning, Woolworths released its preliminary analysis on those upcoming remediation payments.

ASX 200 supermarket facing raft of undetermined issues

Ongoing uncertainty in the case could continue to hamper Woolworths shares, with the company noting the court's decision will require "significant and widespread changes" to accepted retail practice for its own operations, as well as all Australian businesses regardless of their size.

And Woolies said it was too early to consider any appeal of any aspects of the decision. The company noted that a case management conference has been listed for 27 October 2025 to consider the further conduct of the proceedings with many issues still to be determined, adding that "no other substantive orders have been made".

What the company does know is that getting off the legal hook and moving on with business as usual is likely going to be costly.

Management estimates that the one-off additional impact of the court's findings is expected to be in the range of $180 million to $330 million post-tax ($250 million to $470 million pre-tax). And interest, superannuation, and payroll tax could add another $140 million to $200 million post-tax ($200 million to $280 million pre-tax) to Woolies' net liability.

Woolworths shares are down 20% since this time last year, not including dividends.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Casino players throwing chips in the air.
Consumer Staples & Discretionary Shares

Is it still game on for Light & Wonder shares?

The rally may have stalled, but brokers still see some upside for the ASX gaming stock.

Read more »

Woman chooses vegetables for dinner, smiling and looking at camera.
Consumer Staples & Discretionary Shares

Why Goldman Sachs expects Woolworths shares to leap 21%, plus dividends!

Goldman Sachs has a buy rating on Woolworths' resurgent shares. Let’s see why.

Read more »

A baby's eyes open wide in surprise as it sucks on a milk bottle.
Consumer Staples & Discretionary Shares

Chinese birthrate punches a hole in the A2 Milk share price

This key market is looking challenging.

Read more »

a man frustrated looking at the engine of his car
Consumer Staples & Discretionary Shares

ARB shares are crashing 15% today. What's spooking investors?

ARB shares slide 15% after a profit downgrade rattles investors.

Read more »

Woman and 2 men conducting a wine tasting.
Consumer Staples & Discretionary Shares

Can this ASX 200 stock recover after losing 51%?

Broker enthusiasm is going flat for the prestigious wine share.

Read more »

A customer and shopper at the checkout of a supermarket.
Consumer Staples & Discretionary Shares

5 reasons to buy Woolworths shares in 2026

With bad news largely priced in and earnings expected to rebound, Woolworths could be an appealing large-cap recovery story in…

Read more »

Man open mouthed looking shocked while holding betting slip
Consumer Staples & Discretionary Shares

Are The Lottery Corporation shares a buy, sell or hold at current levels?

A lack of jackpots might weigh on upcoming results.

Read more »

A jockey gets down low on a beautiful race horse as they flash past in a professional horse race with another competitor and horse a little further behind in the background.
Consumer Staples & Discretionary Shares

Buyback news has this ASX All Ords gaming stock looking like a sure bet

The buyback will run in parallel to an M&A strategy.

Read more »