Litigation Lending Services backs shareholder action alleging Woolworths masked costly wage underpayments

Litigation Lending Services has agreed to finance a shareholder class action accusing Woolworths Group of overstating profits for more than a decade by failing to recognise widespread staff underpayments in its publicly-reported financials. The funded proceeding, filed in the Federal Court and advanced by boutique firm Dutton Law, marks an uncommon extension of Australia’s wage underpayment crisis into the shareholder arena, transforming what has traditionally been an employment and regulatory risk into potential securities exposure for a major listed company.

According to the statement of claim, investors who purchased Woolworths shares between 2010 and 2025 were misled by financial statements that did not fully reflect employee remuneration obligations, a gap that allegedly inflated reported earnings and masked the scale of emerging backpay liabilities. Those liabilities surged in recent years as wage compliance investigations intensified across the sector, with Woolworths signalling that its after-tax exposure could rise by as much as $530 million, pushing its total remediation bill beyond $1 billion. The class action contends that the market was never given a complete picture of the accounting impact of these issues, and that shareholders paid inflated prices as a result.

The claim also names several current and former senior executives, alleging they authorised or approved disclosures that failed to communicate the full financial effect of underpayments or errors in employee benefit accounting. Woolworths has acknowledged receipt of the proceeding and intends to defend it.

Dutton Law, retained by Litigation Lending Services after a competitive review, will lead the litigation on behalf of the class.