The Legal Light Justin Stack Court rules salaried workers should be paid overtime It has been a common practice for many years for employers to offer staff increases in base salaries to replace the myriad employment award entitlements, such as overtime loadings and weekend penalty rates and allowances under the award. They are called "set-off arrangements" and were largely done to simplify life for the pay office. However, that higher base rate of pay hasn't always matched the amount of overtime, holiday work and extra tasks employees have been asked to do. That has resulted in a controversial and complex ruling in the Federal Court that means supermarket giants Coles and Woolworths face the prospect of a combined catch-up bill over $1 billion for alleged underpayment to around 30,000 salaried staff over several years. After a long and complex court case launched by the Fair Work Ombudsman in 2021, Justice Nye Perram found employers were still obliged to pay employee entitlements for each pay period and could not "set-off" entitlements owed in one pay period - such as fortnightly pay - to another. In his 200-page judgment on 5 September 2025, Justice Perram said the two companies had failed to comply with their obligation to keep accurate employment records. Geoff Baldwin, employment lawyer at Stacks Law Firm, said the judgment will have wide ramifications for employers far beyond the two supermarket giants. "Offering an increase in base pay instead of having to meet award overtime and penalty rates has become fairly common across all businesses, both large and small," Mr Baldwin said. "It was convenient, as both sides accepted that senior employees such as shop managers would have award entitlements rolled into their higher base salary. That way the employee didn't have to clock on and off, and the employer didn't have to record and pay for their extra hours on the job. "But the court found senior employees such as shop managers had been working longer hours than rostered and had been underpaid their overtime and penalty rates. "One unexpected result in the supermarkets and in wider businesses could be that fewer staff will be put into salaried roles." Mr Baldwin said many salaried employees who believe their payroll records have little to do with the reality of their work hours that are expected, or demanded, by their employer could now be considering legal action. "Salaried workers will now have to be treated in the same way regarding overtime as a junior worker who is paid hourly. It would be wise to get legal advice on the impact of this judgment, as it will be costly for employers if they need to change their pay record systems." STACKS LAW FIRM Taylor Kennedy Lawyer 02 6592 6592 taree.stacklaw.com.au Partners in life The Legal Light Justin Stack Court rules salaried workers should be paid overtime It has been a common practice for many years for employers to offer staff increases in base salaries to replace the myriad employment award entitlements , such as overtime loadings and weekend penalty rates and allowances under the award . They are called " set - off arrangements " and were largely done to simplify life for the pay office . However , that higher base rate of pay hasn't always matched the amount of overtime , holiday work and extra tasks employees have been asked to do . That has resulted in a controversial and complex ruling in the Federal Court that means supermarket giants Coles and Woolworths face the prospect of a combined catch - up bill over $ 1 billion for alleged underpayment to around 30,000 salaried staff over several years . After a long and complex court case launched by the Fair Work Ombudsman in 2021 , Justice Nye Perram found employers were still obliged to pay employee entitlements for each pay period and could not " set - off " entitlements owed in one pay period - such as fortnightly pay - to another . In his 200 - page judgment on 5 September 2025 , Justice Perram said the two companies had failed to comply with their obligation to keep accurate employment records . Geoff Baldwin , employment lawyer at Stacks Law Firm , said the judgment will have wide ramifications for employers far beyond the two supermarket giants . " Offering an increase in base pay instead of having to meet award overtime and penalty rates has become fairly common across all businesses , both large and small , " Mr Baldwin said . " It was convenient , as both sides accepted that senior employees such as shop managers would have award entitlements rolled into their higher base salary . That way the employee didn't have to clock on and off , and the employer didn't have to record and pay for their extra hours on the job . " But the court found senior employees such as shop managers had been working longer hours than rostered and had been underpaid their overtime and penalty rates . " One unexpected result in the supermarkets and in wider businesses could be that fewer staff will be put into salaried roles . " Mr Baldwin said many salaried employees who believe their payroll records have little to do with the reality of their work hours that are expected , or demanded , by their employer could now be considering legal action . " Salaried workers will now have to be treated in the same way regarding overtime as a junior worker who is paid hourly . It would be wise to get legal advice on the impact of this judgment , as it will be costly for employers if they need to change their pay record systems . " STACKS LAW FIRM Taylor Kennedy Lawyer 02 6592 6592 taree.stacklaw.com.au Partners in life