Kmart Class Action: Up to 6,000 Salaried Managers Allege Systemic Underpayment in Federal Court
Between 5,000 and 6,000 current and former Kmart store managers could be owed significant back pay after Adero Law filed a class action in the Federal Court on 4 April 2026. The claim alleges that Kmart systematically underpaid salaried managers by failing to ensure their annualised salaries covered all entitlements under the General Retail Industry Award 2020.
If you have worked as a salaried manager at Kmart, or you currently work in a salaried retail management role covered by a Modern Award, this case is directly relevant to your pay.
What the Class Action Alleges
The class action, filed by Adero Law in the Federal Court of Australia, alleges that Kmart’s pay practices for salaried store managers fell short of their legal obligations under the General Retail Industry Award. The core allegations include:
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Off-the-clock work. Managers were allegedly required to work hours beyond their scheduled shifts without compensation, including time spent opening and closing stores, handling deliveries, and managing staff issues outside rostered hours.
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Unpaid overtime. The annualised salary arrangements did not adequately compensate managers for the overtime hours they regularly worked, the claim alleges.
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Failure to pay penalty rates. Weekend, public holiday, and late-night penalty rates were allegedly not properly accounted for in the salary structure. Under the General Retail Industry Award, these rates can add 25% to 250% on top of the base hourly rate, depending on the day and time worked.
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Missing allowances. Entitlements such as meal breaks, laundry allowances, and other Award-specified payments were allegedly not paid or not properly included in annualised salary calculations.
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Annualised salary shortfalls. The claim alleges that Kmart’s annualised salary arrangements did not meet the “better off overall” requirement when all hours worked and all applicable entitlements were properly calculated.
Adero Law represents the lead applicant and the broader class of current and former salaried managers affected by the alleged practices.
Source: Adero Law, Kmart Class Action
Who Is Affected?
The class action covers current and former Kmart salaried store managers across Australia. Adero Law estimates the affected group at between 5,000 and 6,000 workers. You may be part of the class if:
- You worked as a salaried manager or assistant manager at a Kmart store
- Your employment was covered by the General Retail Industry Award 2020
- You regularly worked hours beyond your standard roster
- You worked weekends, public holidays, or evening shifts without separate penalty rate payments
- Your contract included an annualised salary arrangement
The class action covers a multi-year period. Even if you no longer work at Kmart, you may still be eligible to participate.
The Bigger Picture: A Pattern Across Australian Retail
The Kmart class action does not exist in isolation. It follows a clear pattern of underpayment claims against Australia’s largest retail employers, all involving salaried managers and the General Retail Industry Award.
Woolworths and Coles disclosed underpayments affecting approximately 27,000 salaried workers, with combined remediation exceeding $1 billion. The central issue was the same: annualised salary arrangements that did not cover all Award entitlements when actual hours and penalty rates were properly calculated. The Woolworths class action has its next hearing scheduled for 1 May 2026.
The legal mechanism is consistent across these cases. The General Retail Industry Award requires that employers who use annualised salary arrangements must reconcile the salary against what the employee would have earned under the Award, including overtime, penalties, and allowances. If the salary falls short, the employer owes the difference. For years, many large retailers did not perform these reconciliations, or performed them inadequately.
Adero Law has also indicated it is investigating potential claims against Target, Bunnings, Officeworks, The Reject Shop, and Smokemart, suggesting the scope of retail underpayment may extend well beyond the cases already filed.
What Are Annualised Salary Arrangements?
Under the General Retail Industry Award 2020, employers can pay full-time employees an annualised salary instead of paying separate rates for each hour, penalty, and allowance. However, annualised salary arrangements come with strict obligations:
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The salary must cover all entitlements. It must be high enough to compensate the employee for every hour worked at the applicable Award rate, including overtime, penalty rates, and allowances.
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The employer must keep records. Start times, finish times, and unpaid breaks must be recorded for every shift. The employee must sign or acknowledge these records each pay period or roster cycle.
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Annual reconciliation is required. At least once every 12 months, the employer must compare what the employee actually earned against what they would have earned under the Award. If there is a shortfall, it must be paid within 14 days.
When these obligations are not met, the annualised salary arrangement can effectively mask significant underpayments, sometimes for years.
What Should You Do If You Think You Are Affected?
If you work or have worked as a salaried manager in retail, particularly at Kmart, there are practical steps you can take now:
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Gather your records. Collect payslips, employment contracts, rosters, and any correspondence about your pay or hours. The more documentation you have, the stronger your position.
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Check your contract. Look for terms like “annualised salary”, “all-inclusive”, “salary absorbs”, or “set-off” in relation to Award entitlements. These phrases signal an annualised arrangement that should have been reconciled.
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Calculate your actual hours. Estimate the total hours you typically worked per week, including time before and after your rostered shift. Compare this to the standard 38-hour week under the Award.
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Consider penalty rates. If you regularly worked weekends, public holidays, or evenings, those hours attracted penalty rates under the Award. Were those penalties reflected in your pay?
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Contact Adero Law. If you believe you are part of the affected class, you can register your interest through Adero Law’s website. Class actions in Australia generally operate on an “opt-out” basis, meaning you may be included automatically, but registering ensures you receive updates.
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Run a wage audit. Compare your pay against your actual entitlements under the General Retail Industry Award. Even a preliminary check can reveal whether your salary covered what you were owed.
Start Your Free Audit to compare your pay against the General Retail Industry Award.
What Happens Next?
The Kmart class action is in its early stages. Federal Court proceedings typically move through case management, evidence gathering, and potential mediation before reaching a hearing or settlement. Given the scale of the Woolworths and Coles precedent, the outcome of the Kmart case will be closely watched by employers, unions, and workers across the retail sector.
The convergence of retail class actions in April and May 2026, with the Woolworths hearing on 1 May, is putting unprecedented pressure on the industry to address systemic pay practices. For workers, the message is straightforward: if you are on a salary covered by a Modern Award, your pay should be verified against your actual entitlements.
Your pay should reflect every hour you work. Check it.
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