By Ashley Young-
The cosmetics company Lush has shamefully admitted underpaying its Australian workers more than $4m over nearly a decade.
An internal investigation exposed the company’s dodgy operation in underpaying 3,130 employees over eight years from 2010 to 2018, and breached three awards, due to “inadequate” workplace processes. The British-based firm prides itself on its hand-made products and ethical supply chain is now company to be monitored by regulators and its staff to guarantee the fulfilment of its contractual duties.
Workers at global ethical cosmetics company Lush in August alleged that they suffered physical injuries and have developed breathing difficulties due to allegedly poor working conditions in the chain’s Australian factory.
Lush, a British-based firm that prides itself on its handmade products and ethical supply chain, employs up to 70 full time workers in Australia who create its handmade soaps, shampoos, and bath bombs in a factory in Villawood in Sydney.
Lack Of Training
“The contraventions were caused by Lush’s inadequate workplace relations systems and processes, including a lack of training for staff and managers, a manual payroll system, and the absence of a HR department in a rapidly growing business,” the ombudsman said.
“Lush failed to provide its employees with a range of entitlements they were owed … including minimum wage rates, rates for weekend and shift work, overtime rates and allowances. Record-keeping laws were also breached.”
The fair work ombudsman said Lush Australia underpaid staff by a total of $4.4m, including interest and superannuation. The company has agreed to pay back the money and also make a $60,000 contrition payment. The underpayments included retail staff who work in the chain’s stores, in management, and manufacturing workers in its Sydney factory, where all its cosmetics and bath bombs are hand-made.
The ombudsman said Lush Australia had “failed to provide its employees with a range of entitlements they were owed”. The finding is damaging for the reputation of the company which could be sued by those employees that pushed for the correct pay. Lush has had up and downs in its financial successes, and have practically made its employees suffer, even when it was contractually bound to pay them the hired wages.
On Tuesday, the company entered an Enforceable Undertaking with the Fair Work Ombudsman to pay 3,130 current and former employees a total of $4.4 million.
“Under the Enforceable Undertaking, Lush has committed to stringent measures to comply with the law and protect its workforce,” Fair Work Ombudsman Sandra Parker said in a statement.
“This includes engaging, at its own cost, an expert auditing firm to audit its compliance with workplace laws over the next three years.” The affected workers include production assistants and compounders in the company’s Sydney factory as well as retail assistants, supervisors and managers in Lush stores around the country who worked between 2010 and 2018.
One of the reasons for the massive screwup was because the company didn’t have a proper HR department at the time, however there were also other issues like inadequate workplace relations systems and a lack of training in general.
A Guardian Australia investigation in August revealed that some workers in the factory were required to lift up to 500kg of dry materials a day had suffered back and wrist injuries, and developed breathing difficulties from their work.
Godfrey Moase, an executive director with the United Workers Union, which covers Lush’s manufacturing workers added to the criticisms against the company. He said the underpayments could have been easily avoided.
“It reflects a culture where labour rights are not prioritised,” he said. “It is not complex to comply with these awards, it is not complex to comply with Australian minimum standards.”
“For any sizeable business, a contrition payment of $60,000 is a rounding error,” he said.
New Payroll Systems
A spokeswoman for Lush Australia said the company had now “invested significantly in new payroll systems” to “ensure this cannot happen again”.
“We hold our values dear and would never knowingly underpay, cheat or avoid our responsibilities and we regret that these mistakes and oversights happened. We know this has been a difficult experience for all those concerned and we would therefore like to take this opportunity to publicly thank our staff for their patience and understanding whilst the long process of wage recalculation took place.”
The company said in 2018 it had discovered “serious payroll system errors” dating back to 2010, and disclosed them to the fair work ombudsman.
Lush Australia said it had committed to annual audits of its system. The company is also required to display public notices “detailing its workplace law breaches” and operate a hotline for staff to access for three years.
The contrition payment will be made to the commonwealth’s consolidated revenue fund. The fair work ombudsman, Sandra Parker, said Lush had “cooperated with the investigation and demonstrated a strong commitment to rectifying all underpayments”.