Woolworths has been hit with a class action from around 7000 current and former employees who claim that the underpayments scandal is much worse than the $300 million estimate reported in October.

On Sunday November 29, Canberra law firm Adero Law filed a class action lawsuit against Woolworths Group on behalf of thousands of salaried supermarket employees.

“Adero is instructed that current and former Woolworths employees have suffered underpayments and systemic wage theft during their employment at Woolworths on a far greater scale than the retail giant has disclosed,” the firm said in a statement.

Woolworths said that those affected will receive their full entitlements, including back payments with interest and superannuation contributions, “as soon as possible”, with interim back payments, for the two years reviewed to date, to be made before Christmas.

In a statement released to the ASX on Monday morning, Woolworths said it will “fully defend the proceedings” which it believes are “without merit”.

“In the context of its commitment to fully remediate all affected salaried team members, Woolworths Group believes the class action proceedings are without merit,” the retailer said.

An internal review at Woolworths, which commenced in February, found an “inconsistency in pay” for a number of salaried store team members compared to team members paid under the new Enterprise Agreement.

The one-off impact for remediation was estimated to be in the range of $200-300 million (before tax). The supermarket giant said in October that it “unreservedly apologises” for the underpayments which could date back as far as 2010 and impact around 5700 staff.

Woolworths is reviewing all of its businesses including its liquor and department stores and will provide an update at the Group’s half year results in February.

On Friday last, chief executive Brad Banducci announced that he will forgo his A$2.6 million bonus this year in the wake of the payment scandal, while chairman Gordon Cairns has taken a 20 per cent cut to his A$790,531 board fee.

The Fair Work Ombudsman will conduct an investigation in relation to Woolworths’ self-disclosure, Fair Work Ombudsman Sandra Parker said.

“Companies and their Boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including court enforceable undertakings and litigation where appropriate,” Parker said in response to the reported underpayments in October.