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LUSH Australia has today launched a $2 million national back pay scheme, after discovering serious payroll system errors dating back to the introduction of Modern Awards in 2010.

LUSH Australia Director Peta Granger said while external audits would take some months to complete, early investigations suggested more than 5000 Australian staff across the retail and manufacturing businesses could be collectively entitled to as much as $2 million in back pay over an eight-year period.

“We are deeply sorry to our valued staff and customers that we’ve failed to uphold the values that we have always believed in and the high standards that we’ve always sought to achieve,” Granger said.

“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 under pay. 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,” she said.

Granger said various compliance issues were picked up across LUSH’s national network of retail and manufacturing businesses.

The nature of these issues depended on staff members’ employment arrangements, classifications and patterns of work.

“The errors have not affected any of the overtime rates paid for late night trade or weekend and public holiday penalty rates, which we chose not to cut last year.

“The problems are to do with intricate elements of the Retail and Manufacturing Awards, which our very manual payroll system was just not sophisticated enough to interpret correctly.

“Last August a concern was brought to us by Support Team members, which led to a series of investigations in the coming months. This included an initial review of our retail contracts, policies, rostering and salaries, and by December we’d confirmed three areas of the Retail Award had been breached.

“We then engaged an external payroll company to process and calculate the money owed, and the calculations were due back in March. Unfortunately, this process uncovered further errors and identified a far more significant issue with our payroll system than we originally thought.

“At this point we enlisted specific industry expertise and began working with the National Retail Association to conduct an extensive review of our whole business. The review was completed this month, and we’ve also been working with a payroll service provider to roll out a new, compliant payroll system to guard against this happening again.

“Since then we have been working around the clock to finalise the solution we are announcing today.

“We discovered this error and it’s our duty to report it – to our staff, to the public and to the appropriate authorities, including the Fair Work Ombudsman.”

Granger said the company was now making a public pledge to fix the mistake, and pay every cent owed, including interest, to those who’d been affected.

“Whether it’s $1 or $1000, we are committed to connecting with every employee who’s been affected by our mistake,” she said.

To meet this commitment, we’ve invested $1.5 million for external payroll experts to build a system onto which 200,000 handwritten paper timesheets will be scanned, indexed and entered so that the last eight years of payroll can be re-run accurately.

“This process will give all employees full transparency of their work history, how their entitlements have been calculated and if any back payment is owed to them.

“This is a complex process, and realistically it will take the rest of this year to get it right. We are confident, however, that back payments including interest will begin to be paid by December.”

Granger urges any former staff members who had been employed by LUSH since 2010 to make contact and register for the back pay scheme via lushbackpay.com.au.

“We are calling on everyone who’s worked for us in Australia over the last eight years to get in contact and register their details online, incase you are one of the people owed money,” she said.

The investigation and calculation process will cost around $1.5 million to complete, on top of the expected $2 million back payment.

The national back payment process will include:

  • LUSH will consult with the Fair Work Ombudsman and Unions
  • Historical timesheets and payroll records will be made available to former and current employees to ensure complete transparency on their entitlements.
  • The National Retail Association spot checking the back payment calculation to ensure an additional layer of accuracy and compliance
  • LUSH’s external payroll provider will actively track down past employees, and if unsuccessful in finding them, will entrust their back payment to the Australian Taxation Office.

Granger said the errors were particularly distressing given LUSH has a sincere belief in ethical trade and workers’ rights.

“These beliefs are why we have a generous bonus scheme that shares our profits with the hardworking people who generate them, meaning LUSH has, over the same time period, paid out almost $10 million in bonuses to workers across our retail and manufacturing businesses,” she said.

“However, bonus is supposed to be an added benefit, to share our profits with the hard-working staff who generate them. So, regardless of these bonuses, the fact is, we calculated some pay incorrectly and we want to put that right.”

In the coming weeks, members of the leadership team will visit LUSH staff across Australia and make themselves available to apologise in person, to outline the process and timing of the back payment, and answer any questions they may have.

“We are sincerely sorry for letting our staff down so badly. They put their hearts and souls into LUSH and it’s them, along with our customers, who drive our business, fuel our growth and make it the vibrant place it is.

“We made mistakes on pay, we found those mistakes and now we are doing everything in our power to pay the money we owe as quickly and as transparently as possible. We know we’re far from perfect, but we always strive to do the right thing”.

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