Background
Three current or former ALDI employees brought a representative proceeding on behalf of 32,308 current and former employees, alleging unpaid work under enterprise agreements. The claims concerned pre-shift work by warehouse employees and pre- and post-shift work by store employees, including associated loadings, allowances, paid breaks, superannuation and interest. The Shop, Distributive and Allied Employees’ Association (SDA) brought a parallel penalty proceeding seeking declarations and penalties.
The proceedings followed a 2022 decision finding that pre-commencement tasks performed by four ALDI warehouse employees were compensable work. ALDI subsequently made about $28.9 million in voluntary payments, but the SDA contended that the program did not fully compensate affected employees and excluded many former employees. The parties negotiated a settlement after lengthy mediation and negotiations.
The Court’s Holding
Justice McElwaine approved the settlement under s 33V of the Federal Court of Australia Act 1976 (Cth), finding it fair and reasonable and in the interests of group members as a whole. The settlement resolves both the representative proceeding and the related SDA penalty proceeding, without any admission of liability by ALDI.
The Court approved a distribution scheme under which ALDI will calculate and pay individual entitlements, including interest and applicable superannuation. ALDI was appointed scheme administrator because it holds the necessary employment records and has already performed substantial calculation work; PwC or KPMG will conduct reviews, the SDA may audit compliance, and group members may seek review of their assessments. ALDI must pay the SDA $1.5 million toward the costs of both proceedings, meaning group members’ payments will not be reduced by legal costs or a funder commission.
Key Takeaways
- The approved settlement is estimated to result in about $55.2 million overall for affected employees, including earlier voluntary payments, additional payments and interest.
- Former employees must register to receive payment if ALDI lacks current details; current employees are automatically included.
- The Court accepted compromises including fortnightly offsets for late starts or early finishes and an interest cap, given substantial liability, proof and cost risks in a contested trial.
Why It Matters
The decision illustrates the Federal Court’s protective role in class-action settlements, particularly where wage claims require individualized calculations across a large workforce. The Court accepted a practical, record-based methodology as fair despite its inability to identify every former employee or perfectly measure every instance of work.
It also shows how settlement of a parallel union penalty proceeding can fund litigation costs without reducing employees’ recoveries. The Court considered that outcome preferable to the likely cost and delay of trial, including the prospect of a later common-fund costs order.