The national wages watchdog is taking Coles to court, alleging the supermarket giant shortchanged thousands of workers by more than $100 million, significantly more than it had previously estimated.

The Fair Work Ombudsman announced on Thursday it had started legal action against Coles, claiming the retailer had underpaid 7500 salaried employees a total of $115 million between January 2017 and March 2020, because it worked staff for more hours than they were formally paid for.

Forty-five of the salaried managers were allegedly underpaid more than $100,000 with the largest single underpayment $471,647. Affected staff, many of whom were also allegedly not paid proper penalty rates and allowances, were located in every state and territory across regional and urban areas.

Ombudsman Sandra Parker said businesses using annual salaries could not just assume they covered all entitlements. “This court action against Coles should serve as a warning to all employers that they can face serious consequences if they do not prioritise workplace law compliance,” Ms Parker said.

The wages watchdog will tell the court salaried managers typically worked one extra hour per shift between October 2017 and March 2020.

It alleges “Coles’ remediation program has significantly underestimated amounts owed to the employees and that more than $108 million remains outstanding”.

Coles faces penalties of $63,000 per breach of a range of industrial provisions, if proven.

In a statement to the stock exchange, Coles said it had started a review of pay arrangements for salaried employees paid under the retail award in February 2020 and said the ombudsman had begun its investigation afterward.

“Coles apologised to affected team members and conducted a remediation program.