Giant retailer Woolworths is facing a legal challenge over its existing pay agreement with workers and a claim for $1 billion in backpay.

Key points: Breakaway retail union applies to terminate 2012 EBA with Woolworths arguing it leaves workers with less than award wages

Breakaway retail union applies to terminate 2012 EBA with Woolworths arguing it leaves workers with less than award wages Union says the backpay for 100,000 Woolworths workers would be about $1b

Union says the backpay for 100,000 Woolworths workers would be about $1b Action follows similar move which terminated 2012 Coles EBA late last year

The action to terminate Woolworths' 2012 enterprise bargaining agreement (EBA) has been launched by Woolworths worker, Loukas Kakogiannis and supported by his union, the Retail and Fast Food Workers Union (RAFFWU).

Mr Kakogiannis's application to the Fair Work Commission (FWC) argues the majority of Woolworths's 100,000 workers have been paid less than award wages for six years.

Central to the application is the union's push is to wipe out the EBA's penalty, casual loading and overtime rates.

Mr Kakogiannis said the existing award meant he and many of his colleagues were being paid less than the minimum wages in the award.

"I am losing $4,000 a year and many other workers are losing even more," Mr Kakogiannis said.

"The agreement pays no penalty rates on weeknight evenings, during the day on Saturday and cuts the Sunday penalty rate.

"Casual loading is cut from 25 per cent to 20 per cent and 17 and 18-year-old staff have cut rates too."

Coles EBA changed last year

RAFFWU was formed two years ago in response to a series of enterprise agreements drawn up with the sector's traditional and conservative union — the Shop, Distributive and Allied Employees Association (SDA) — and big employers such as Coles, McDonalds and Woolworths.

RAUFFU secretary Josh Cullinan said the old agreement was approved because the Fair Work Commission relied on misleading material from Woolworths and the SDA.

"They provided 'indicative rosters' which were nothing of the sort. The material did not deal with workers working most of their hours on evenings and weekends," he said.

"We know the vast majority of workers work at those times. Many of them, like Loukas, have lost a fortune."

Mr Cullinan was instrumental a battle to alter similar EBA struck between Coles and the SDA.

The case brought by Coles shelf-stacker Penny Vickers in 2016 resulted in a new EBA, with better conditions, taking effect earlier this year.

Mr Cullinan said the existing Woolworths agreement was worse than the old Coles agreement and affected more people.

"In the case of Coles, the difference [between what workers were paid and should have been paid] was around $600 million, for Woolworths $1 billion over six years is a fair estimate," he said.

Woolworths surprised

A spokesman for Woolworths said the company was, "Surprised to learn of this application through a press release given we have been in negotiations with RAFFWU over a new agreement for more than six months.

"We have every confidence in the validity of our existing Enterprise Agreement and will respond to the application as required.

"The proposed agreement already has the in-principle support of the SDA, AWU [Australian Workers' Union] and AMIEU [Australian Meat Industry Employees Union, and we are awaiting RAFFWU's response."

The SDA said it expected its members would vote on the new agreement at meetings next week.

The negotiations on a new enterprise agreement have been going on for more than six months and are likely to move Woolworths workers away from state-based wage rates to national wage rates for the first time.