A caveat up front. This case arose under the General Retail Industry Award. It does not directly decide how every other award, enterprise agreement, or flexibility arrangement will be treated. The principles are still broadly relevant because the Fair Work Act provisions the Court relied on apply across the board, but how they land will depend on the instrument covering your workforce. I'm not a lawyer. This is my reading of the operational impact, informed by PwC's Workforce Leaders' Forum on 4 March 2026. If you need advice on your own awards or agreements, get workplace law advice.
As of March 2026, the decision remains subject to further proceedings, including penalties, and the substantive findings may still be appealed. But until that happens, this is the law as it stands. Waiting for an appeal that may not come is not a compliance strategy.
In September 2025, the Federal Court handed down its decision in Fair Work Ombudsman v Woolworths Group Limited; Coles Supermarkets Australia Pty Ltd [2025] FCA 1092. Two of the country's largest employers. Two years in court. One judgment that should change how employers paying annualised salaries think about proof.
Most of the attention went to set off. The finding that you cannot spread payments across pay periods to cover award entitlements. That matters. But the part of the decision that will create the most operational pressure is not really about calculation. It is about evidence.
That is the shift too many employers are still missing.
Most organisations will treat this as a payroll issue. Fix the set off clause. Turn on the reconciliation. Top up the shortfall. Move on. But payroll is not the real point of pressure here.
Payroll calculates. The Court is asking whether you can prove the outcome. In one intelligible trail. In one form an employee or inspector can understand. Linking the roster, the actual hours, the entitlements, and the payment.
That is not just a payroll question. That is a governance question.
What the Court found
Three findings matter most.
Set off only works within a single pay period. Woolworths pooled payments across 26 weeks. Coles across 12 months. Both tried to bank surpluses from one pay period to cover gaps in the next. Justice Perram found that did not satisfy section 323(1) of the Fair Work Act, which requires employees to be paid in full, at least monthly. You can still pay above the award. But each pay period has to stand on its own.
Records have to prove compliance, not just exist. Woolworths pointed to roster and clocking data. The Court found that was not enough. Not because the data was inaccurate, but because it did not connect hours actually worked to the entitlements those hours triggered and then to the payments made against them. Because the records fell short, section 557C becomes critical. That is the reverse onus provision. If you were required to keep a record and did not, the burden shifts to the employer. The employee does not have to prove the underpayment first. The employer has to disprove it.
Varying award conditions requires real consent. An employee showing up to a changed shift does not mean they agreed to it. Employers need to show the employee understood what they were giving up and agreed to the change. That means written agreement, informed consent, and a record of both.
What stood out from the PwC session
PwC's Workforce Leaders' Forum on 4 March 2026 focused on the operational reality of the case. The panel was Bryony Binns, Legal Partner in Workplace Law, and Daniel Lonie, Director in Workforce Payroll Advisory, moderated by Claire Soccio, Partner and Workforce Leader.
I submitted a question about whether Justice Perram's finding on regulations 3.33 and 3.34 is really a time and attendance configuration problem, or a governance gap between T&A, payroll, and HR.
The answer from both panelists was simple: it is both.
Binns went back to the language of the regulations. The record needs to be in English, legible, and in "a form, not many forms" that an employee or a Fair Work inspector can understand. Her summary of what Perram was looking for was "one coherent singular source of truth" connecting the hours worked, the overtime worked, and the payment consequence that followed.
That does not necessarily mean one software product.
It does mean one intelligible evidence trail.
Lonie made the same point from the remediation side. When employers have to reconstruct historical underpayments, the data is usually spread across multiple systems. Rosters in one place. Actuals in another. Payroll somewhere else. The work becomes reconstructing what should already have existed as a single trail of evidence.
He also made a point that more employers should be acting on now: review your payroll cycles.
Many salaried employees are paid monthly, but not entirely in arrears. There is often a mix of advance and arrears within the same cycle. If overtime is worked after the payroll cut off, reconciling within the same pay period becomes extremely difficult. That may mean moving to fully retrospective payment or changing the pay frequency. But before doing that, employers need to understand what the applicable award requires and think through the employee impact. Lonie's point was practical. Where organisations have changed cycles well, they have had a transition plan, proper consultation, and sometimes transitional payments to help employees through the change.
Both panelists also made the technology point, with an important qualification. Yes, there are solutions in the market. Yes, the 2020 annualised salary clause changes pushed vendor investment into reconciliation capability. But technology does not solve a bad process on its own. If the system is configured badly, or if the award coverage in the master data is wrong, the answer coming out the other side will still be wrong.
The chain of evidence
This is the part employers need to sit with.
What the Court expects you to produce is not abstract. It is a chain of evidence:
- the employee's award classification
- the hours they actually worked
- the entitlements those hours attracted, including overtime, penalties, loadings, and allowances
- the salary paid in the relevant pay period
- the reconciliation showing whether that salary covered those entitlements
- and where terms were varied, proof that the employee understood and agreed
That evidence usually sits across workforce management, time and attendance, HR master data, and payroll. Four systems. Often four teams. Usually different data owners and update cycles.
The Court does not care about your system architecture.
It wants one intelligible record.
What this means in practice
Start with an independent review. Before fixing anything, find out where you actually stand. A payroll compliance review can be targeted or fully end to end, but the point is the same. You need an independent baseline of what your systems are doing versus what you believe they are doing. That review should cover more than payroll calculations. It should look at award coverage, payroll cycles, roster to actual variance, data retention, and how agreement based variations are documented.
Audit your records, not just your systems. Ask the uncomfortable questions. Are you exporting and storing rosters, timesheets, payroll records, and written agreements somewhere durable? Can you produce the full evidence chain for one employee, for one pay period, from two years ago? Do your records capture start and finish times, breaks, and enough detail to calculate penalties and overtime, or do they just show total hours? Does your system flag when actual hours diverge from the roster?
Build consent workflows. This is likely to be the most painful day to day implication, especially in rostered workforces. Shift swaps. Roster changes. Extra hours. Lost breaks between shifts. Bids for open shifts. These things happen constantly. But if they affect entitlements, employers now need a clearer process for showing that the employee understood the consequence and agreed. A text message to a manager and a roster update in the system will often not be enough.
Review set off arrangements and pay cycles together. Do not review your set off clause in isolation. Review it together with your payroll cycle. If you are paying in advance, or partly in advance, ask whether that still works if entitlements have to be satisfied within the relevant pay period.
Be honest about where annualised salaries still make sense. This case does not mean annualised salary arrangements are dead. It does mean some employers need to be more realistic about where they work and where they do not. A relatively stable clerical workforce on predictable hours is one thing. A shift based workforce with penalties, loadings, last minute changes, and unpredictable overtime is another.
A cautionary note about records
One more point, because it illustrates a risk that has nothing to do with legal interpretation and everything to do with evidence survival.
At a previous employer, we worked with a major workforce technology vendor. That vendor was later acquired. The new owner moved customers onto enterprise pricing that many could not afford. Subscriptions were terminated. Unless customers had been diligently exporting their data and maintaining independent copies, years of digital rosters, timesheets, and workforce records effectively disappeared.
That matters here.
You may be required to keep records for seven years. If your vendor changes ownership, changes pricing, or sunsets the platform, section 557C will not save you because your records vanished with the subscription.
Digital platforms are essential. But do not confuse having a system with having records. Export regularly. Store independently. Verify completeness. Plan for the day the platform is no longer there.
The bottom line
The employers moving now are not waiting for the appeal. They are getting independent reviews. Auditing award coverage. Reviewing payroll cycles. Building consent workflows. Checking that roster to actual variance is visible. And making sure their records survive independently of any one vendor.
The obligations are manageable with the right infrastructure. But configuration alone does not close the gap. You need a setup that produces one intelligible trail from roster to actual hours to entitlements to payment.
Not four systems that are each correct in isolation.
One record that holds together.