People Matters – with HRAnywhere
25th September 2025
By FTMA News
Recently, a Federal Court decision was announced following allegations of widespread underpayments of salaried store managers at Coles and Woolworths.
The supermarkets argued that set-off clauses in employment contracts allowed them to average out overpayments (usually over a 6 or 12 month period), but the Court disagreed, finding such clauses valid only within individual pay cycles.
The Court also confirmed that employers must track and record overtime hours for salaried staff covered by an Award, regardless of how they’re paid. A general clause requiring “reasonable additional hours” may be enough to establish entitlement to overtime pay, even without explicit instructions from management.
Whilst the decision was based on the retail sector, it seems that there could be implications across all industries regardless of the size of business. So, what may this mean for you as an employer to ensure you are meeting your obligations?
• Review employment agreements for salaried employees and update set off clauses to align with this ruling.
• Reconcile entitlements every pay period by calculating the amount of remuneration that would have been payable to the employee under the provisions of the award versus what they are receiving as part of their annualised salary. Make additional payments in each pay period where the reconciliations undertaken show a shortfall.
• Ensure compliance with Fair Work payroll and record keeping guidelines. This means reconciling entitlements each pay period; tracking and retaining records of employee entitlements, such as penalty rates, loadings and overtime hours and the basis for calculating those entitlements; maintaining legible records readily accessible for a FW inspector; and keeping those records for at least seven years.
On 27 October 2025, there will be another hearing to discuss the future steps and compensation for employees that have been recognised as underpaid.
For further advice, contact the HRAnywhere team on 1300 208 828 or info@hranywhere.com.au.
