Coles reported a $1.1 billion full-year profit this week. The number that made headlines wasn’t the profit. It was the $235 million sitting alongside it, a provision for remediating thousands of underpaid workers, the financial consequence of a Federal Court finding that Coles had underpaid close to 8,700 salaried managers over several years.

The legal mechanics are technical – annualised salary arrangements, set-off clauses, and whether a single higher salary can lawfully absorb entitlements that should have been calculated and paid period by period under the General Retail Industry Award. Most of the public will never read the judgment. What they will register is simpler and more damaging: a company synonymous with everyday Australian life underpaid its own people, at scale, for years, while posting billion-dollar profits.

That gap, between a highly technical legal failure and a plainly understood moral one, is exactly where reputation can be won or lost. Here’s how a PR-led response should think about it.

Why this is a reputation issue, not just a compliance one

Underpayment stories land differently to most corporate scandals because everyone can see themselves in the story. A data breach is abstract and a supply chain issue is distant. Wage theft is immediate and personal – it could be a neighbour, a nephew on his first retail job, the person who served you yesterday.

Coles also carries a scale disadvantage here. It employs an enormous casual and award-covered workforce, operates in an industry already under intense scrutiny over pricing and margins, and is reporting record profits in the same breath as the underpayment disclosure. Every one of those factors sharpens the contrast between what the company earns and what it failed to pay the people who helped it earn it. In a cost sensitive environment, that contrast is not a footnote, it’s the story.

The instinct to defend the legal position is the wrong instinct, but does it work?

The natural corporate reflex in a case like this is to lean on the legal detail: this was about the interpretation of set-off clauses, not a deliberate decision to short-change staff, and the company has already made substantial remediation payments. All of that may be true, and none of it will land as an explanation with the public, because the public isn’t assessing legal technicality. They’re assessing whether the company put staff last, and took advantage of them while it grew.

This is the core distinction in situational crisis communication theory: preventable crises, where an organisation is seen to have chosen actions that led to harm, demand what’s called an accommodative response, one that leads with accountability and correction, not one that leads with justification. A systemic payroll failure spanning years and thousands of employees reads as preventable, whatever the legal nuance behind it. Trying to relitigate the legal argument in the court of public opinion, rather than owning the outcome, generally makes things worse, not better.

What a strong corporate response actually does

1. It leads with the people affected, not the shareholders. The first sentence of any public statement should be about the workers who were short-changed, what they’re owed, and by when, not about profit context or legal characterisation. Whatever comes second, that ordering signals where the company’s priorities actually sit.
2. It quantifies the fix, specifically. Vague reassurance (“we take this seriously”) does nothing. Specific, checkable commitments do, for example how many employees, what average amount owed, what the remediation timeline looks like, and who to contact if someone believes they were affected and hasn’t yet been reached. Specificity reads as competence. Vagueness reads as spin.
3. It separates the apology from the defence. An apology diluted by an immediate explanation of why it wasn’t really the company’s fault isn’t an apology, it’s a hedge, and audiences can tell the difference instantly. Say the apology plainly first. Address the legal and structural detail separately, for the audiences who genuinely need it (investors, regulators, industry press), not folded into the same sentence as the “sorry.”
4. It gets ahead of the compounding story. A one-off underpayment story is a bad week. An underpayment story sitting inside a pattern, wage theft alongside pricing scrutiny, alongside supplier code breaches, alongside prior “Down Down” misleading discount findings, becomes a character story about the company rather than an isolated incident. The response needs to acknowledge the pattern honestly rather than treat each issue as unconnected, because the public has already connected them.

Managing the wider stakeholder map

A story like this pulls on several audiences at once, each needing a slightly different version of the same honest message.

Current staff need to hear directly, before they read it in the news, whether they’re affected, and exactly how the company plans to make it right. Nothing damages internal trust and retention faster than employees learning about their own underpayment from a headline rather than from their employer. For a retailer already competing hard for frontline talent, this is as much a recruitment and retention issue as a public one.

Affected former employees need a straightforward, well-publicised process for claiming what they’re owed, not a bureaucratic maze that quietly reduces how many people actually claim. A remediation process seen to be difficult to access reads as bad faith, regardless of the dollar figure attached to it.

Regulators and unions need to see structural change, not just a cheque. The Fair Work Ombudsman and the union movement are watching for evidence that payroll systems, award interpretation, and internal audit have genuinely changed, not just that a provision has been booked. Public commitments to independent payroll audits or third-party compliance reviews carry more weight here than statements of intent.

Customers and the broader public mostly want to see that the company understands why this matters, in plain language, without corporate distance. This is where tone does the most work. Confident, defensive corporate language reinforces the “profits over people” framing. Direct, human language, from a named leader, not just a press release, does the opposite.

Investors are the one audience where the financial and legal detail genuinely belongs front and centre, remediation timelines, quantum certainty, and the risk of further liability all matter to them directly. The mistake is applying investor-register language to the public-facing response as well.

What Coles actually said

It’s worth looking at the real language, because it illustrates the pattern above almost perfectly.

In this week’s FY26 annual report, Coles attributed the $235 million charge to the Federal Court judgment handed down in September 2025, framing it as a “significant item” in accounting terms rather than addressing the underpayment itself in plain language. The report also disclosed reductions to executive short-term incentives tied to the matter, including a 20 per cent reduction for CEO Leah Weckert, but was careful to specify this reflected general leadership accountability for outcomes in their area rather than any finding of individual wrongdoing.

CEO Weckert’s public comments on the results, meanwhile, focused almost entirely on performance: sales growth, automation, e-commerce, and customer satisfaction. There’s no direct, plain-language line to the affected staff in the material that accompanied this week’s numbers.

Go back further, to September 2025 when the Federal Court judgment first landed, and the pattern holds. Coles’ statement at the time estimated further remediation of $150 to $250 million “may be required to reflect the findings of the court,” language that stays entirely in the register of quantum and legal exposure.

None of this is dishonest, it is legally careful. But across three separate disclosures spanning almost a year, the throughline is the same: accounting language, remuneration formulas, and legal characterisation, with no plain-spoken moment that puts the affected workers, not the financial exposure, at the centre of what the company is saying.

Will it actually cost them?

Here’s the open question, and it’s genuinely one worth watching rather than answering with false confidence. Coles’ share price rose on the back of this week’s result, not despite it, investors read past the wage provision to the underlying earnings growth, and the market has treated this as a manageable, quantified, one-off cost rather than a reputational one. That’s a rational response from people assessing balance sheets. It’s a different question entirely from whether the public, as customers and as citizens, forms a lasting view of the company from this.

In my opinion, there are two ways this plays out, and either is plausible. One: the avoidance pattern, legal register over plain acknowledgement, quantum over accountability, compounds over time. Each new underpayment story, and Coles is not alone here, Woolworths faces the same exposure, add to a slow accumulation of “this is a company that pays its people last,” and eventually that shows up in customer choice, in talent attraction, in the benefit of the doubt the company gets next time something goes wrong. Trust erosion shows up as a gradual softening of loyalty that’s hard to reverse once it’s set in.

Two: Coles and Woolworths’ duopoly position genuinely insulates them from this dynamic in a way it wouldn’t for a smaller or more substitutable brand. For most Australians, the alternative to Coles is Woolworths, not no supermarket at all, and Woolworths carries close to identical underpayment exposure from the same court case. When the two dominant options in a category share the same reputational problem, convenience and habit may simply outweigh the erosion of trust, because there’s nowhere meaningfully better to take that trust instead.

My honest view is that both dynamics are probably true at once, and unevenly across audiences. Investors will keep reading this as a quantified, closed-out cost. Frontline retail talent, the people Coles needs to recruit and retain, are likely to remember it for considerably longer, and that’s arguably where the real commercial cost of this kind of legalistic, accountability-light communication shows up first, not at the checkout, but in who’s willing to work there.

The broader lesson

No communications strategy fixes a payroll system that underpaid thousands of people for years. That’s a governance and operational failure, and it has to be fixed at that level first. What good crisis communications can do is make sure the public sees a company that found the problem, owned it plainly, fixed it specifically, and changed what let it happen in the first place.

The alternative, minimising, legalising, and hoping the story moves on before the next earnings call, rarely works anymore (unless you are Coles!). Audiences are far less patient with the gap between what a company says and what it’s actually done, and a underpayment story left to fester doesn’t fade. It becomes the thing people remember about the brand, long after the provision has been paid out.

By Amanda Lacey

This article is provided for general commentary on public interest matters and does not constitute legal advice. Popcom is not associated with, and has not been engaged by, Coles Group in relation to these matters.