Global fashion retailer H&M is reportedly dealing with a mass of wage underpayments in Australia as it struggles to maintain growth in the local market.
The Australian reported this week that the Swedish-born retail giant is facing an investigation by the Fair Work Ombudsman over allegations that as many as 1,500 of its Australian staff were underpaid, with the bill totalling $35 million. These underpayments could likely stretch back nine years.
H&M joins a raft of other major retailers that have faced hefty fines for lost wages in recent years. Woolworths had back-paid around $330 million over the last year, while Coles claimed to have made $31 million in remediation costs. This doesn't include fines. Rebel owner Super Retail Group has also been caught in wage underpayments.
This comes as H&M Australia has been shrinking in scale locally, likely driven by challenges during COVID. In 2021, the brand closed its Westfield Bondi Junction store over a rental dispute. At its peak pre-COVID, the brand had 50 stores nationwide. This number now sits at 34.
Dwindling store counts for H&M is not just an Australian phenomenon, with Ragtrader research into its global accounts showing the HM Group – which includes other brands such as Cos, & Other Stories and Monki – has been cutting its global store portfolio, most notably in the Asia, Oceania and Africa (AOA) region.
In the nine months between December 2024 and August 2025, HM Group closed 78 stores in the AOA region alone, bringing the total count in the region down to 967. Across all geographies, 135 stores have been closed in the nine month period, with its global portfolio ending at 4,118.
Sales have naturally suffered across the brand, with global sales down 3 per cent in the three months to August 2025, driven by a 10 per cent fall in the AOA region. That region’s total sales for the recent third quarter to August 2025 were 6,450 billion Swedish Kronar, equivalent to just over A$1 billion.
In the nine month period to August 2025, HM Group’s AOA sales were 20.969 billion Kronar, or around A$3.3 billion.
Corporate filings reportedly obtained by The Australian show that H&M’s Australian sales were $340 million for the 12 months to November 2024, down from $354.55 million in the prior 12 months. In that time, the local arm reported a $1.82 million profit, up from a $3.56 million loss in the prior year.
Matched with the HM Group’s total sales in the AOA region during the same 12-month period – 29.8 billion Kronar or A$4.78 billion – this indicates Australian sales make up around 7 per cent for the AOA region. It is unclear if the ASIC filings focus on the H&M brand alone or include its sister subsidiaries Cos and & Other Stories, both of which have presences in Australia.
H&M Australia reportedly addressed the wage underpayments in the same corporate filings, noting it has engaged a third-party specialist to undertake a review of monetary entitlements of store based employees.
“Based upon the review of a sample of employees an estimate of the underpayment of employee entitlements including salary related payments and oncosts was calculated by the specialists, and this calculation and estimation process is ongoing as at the date of this report.”
$82.9 million has already been spent on staff wages and other related expenses.
The accounts also show that H&M Australia has since spent $82.9 million on employee wages and related staff expenses. Ragtrader has reached out to H&M for comment.
FWO claws back $2 billion in backpay
Over the last few years, the FWO has been cracking down on wage underpayments, clawing back billions.
Between 2024 and 2025, the FWO recovered $358 million for more than 249,000 underpaid workers, taking back-payments to workers to more than $2 billion across the last five years.
The latest recoveries came in a year when the FWO secured its highest ever penalties in court in a single legal action, contributing to record annual penalties. The operators of Sushi Bay outlets in NSW, Darwin and Canberra were ordered to pay $15.3 million for deliberately underpaying 163 workers more than $650,000.
About 60 per cent of the 2024-25 recoveries came from large corporate sector employers. They collectively back-paid almost $213 million to nearly 118,000 underpaid employees. This sector, a continuing priority for the FWO, has had $1.11 billion back-paid to workers since July 2020.
According to the Fair Work Ombudsman Anna Booth, the government body has helped deliver significant back-payments to workers across the nation, holding employers to account.
“An important element of this has been our clear expectations to large corporates that following workplace laws must be an ongoing priority – and this includes thoroughly fixing up past underpayments as well as improving governance and processes for the future,” Booth said.
“Our investigations and litigations have highlighted what is at stake if employers aren’t serious about meeting all their workers’ legal entitlements.
“We have also embedded a strategic compliance and enforcement approach that is tailored to the specific circumstances and context of each matter. We work with employers and workers to resolve workplace disputes, including encouraging voluntary and guided compliance whenever appropriate.
The FWO also secured a record total of $23.7 million in court penalties in the same 2024-25 timeframe. In addition to Sushi Bay, major litigation outcomes included the FWO securing $5.1 million in penalties against Blue Sky Kids Land Pty Ltd, Q Fay Trading Pty Ltd and their company directors, related to migrant workers, who spoke limited English, being paid as little as $10 an hour. Protecting the workplace rights of visa holders remains a priority for the FWO.
The FWO filed 73 new litigations in 2024-25.
Alongside this, the FWO also reported that anonymous tip-offs surged upwards in the last year, with the 25,608 anonymous reports received in 2024–25 being up 50 per cent from the 17,021 reports received in 2023–24.
Young workers (aged 15-24), who can be vulnerable to workplace exploitation, were overrepresented in terms of anonymous reporting to the FWO. They represented 33 per cent of the anonymous reports, while apprentices and trainees accounted for nine per cent.
“We understand that young workers and others at the start of their careers can be scared to speak up when something doesn’t seem right,” Booth said. “We’d remind them they can’t get in trouble for seeking our help – the law protects them.
“The same applies to migrant workers – they have the same workplace rights as anyone else in Australia, and protections exist for their visas. They are encouraged to contact us for free advice.”