Lush outgrew payroll system resulting in significant pay errors

23 July 2018

The cosmetics firm Lush will be forced to pay employees millions of dollars in back pay after the discovery of a significant payroll error that meant it had been underpaying staff since 2010.

The company announced that it had reported itself to the fair work ombudsman after discovering that it had underpaid more than 5,000 employees by $2m across an eight-year period.

The underpayment dates back to the introduction of the modern award system in 2010, and the failure of the company’s manual payment system to interpret the intricacies of the modern awards correctly.

 

Lush Cosmetics’ national director Peta Granger said:

 “What has become alarmingly clear to us at Lush Australia is that our internal payment systems have not kept pace with our growth. This resulted from a very serious failure on our part to upgrade our internal systems. We should have had far more respect for our people’s pay and upgraded our payroll infrastructure to keep up with the growth of our business.

We would never knowingly underpay. This was not deliberate. It goes against everything we value and believe in, and we are so sorry to have let our staff down in this way.”

Granger said the company’s manual payroll systems were “just not sophisticated enough” to correctly interpret the retail and manufacturing awards, and as a result, the company had sometimes failed to correctly account for overtime rates.

The company has established a national payback scheme for staff, and the company has committed to making sure it pays back every cent owed, with interest.