The payroll ruling every workshop owner needs to read

By John Girardi

In September 2025, the Federal Court delivered a landmark decision that sent shock waves through the world of Human Resources. In that case, the rostering arrangements for salaried employees at Woolworths and Coles were found to have resulted in many of these employees being underpaid, even though they appeared to be on good salaries. The ramifications of this decision is likely to cost hundreds of millions of dollars in back payments.

This isn’t a supermarket problem. It’s a compliance risk that all business owners need to be aware of. With salaried employment contracts, salaries are usually stated in annual terms. For example, an employee might be paid an annual salary of $80,000 plus superannuation. The salary is designed to compensate the employee for things like overtime rates, shift penalties, and annual leave loading. It doesn’t mean the employee isn’t paid these entitlements – legally they have to be paid – but they are rolled up into the salary.

Having worked in the Human Resources field for more than 30 years, I’ve assisted many employers with drafting salaried employment contracts. When I’ve thought about these contracts and how they work, I’ve always thought in terms of the annual amount paid to the person. But this recent Federal Court decision makes it clear that we need to think of the salaries paid to employees in terms of the pay periods they are paid in.

For example, if you pay your employees fortnightly, you need to think of the salary in terms of what it covers for each and every fortnight. The Federal Court decision makes it clear that employees just receive their full award entitlements in each pay period—not averaged out over the year

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