The Australian operation of the multinational cosmetics company Lush has back-paid its employees approximately AUD 4.4 million (USD 3.2 million) and entered into an Enforceable Undertaking with the Fair Work Ombudsman.

Lush Australasia Retail Pty Limited and Lush Australasia Manufacturing Pty Ltd self-reported to the regulator in 2018 that it had underpaid employees.

Lush manufactures cosmetics at a factory in New South Wales and sells them online and through stores under the ‘Lush’ brand.

The underpaid employees were located at its Sydney factory and across stores in Victoria, New South Wales, Queensland, Western Australia, South Australia, Tasmania and the Australian Capital Territory. The employees held positions including production assistants, compounders, sales assistants, retail supervisors and managers.

The breaches 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 workplace watchdog said.

Lush failed to provide its employees with a range of entitlements they were owed under the General Retail Industry Award 2010, Manufacturing and Associated Industries and Occupations Award 2010 and Clerks, Private Sector Award 2010. The company identified the underpayments during an internal audit.

Underpaid entitlements included minimum wage rates, rates for weekend and shift work, overtime rates and allowances. Record-keeping laws were also breached.

Lush has identified and back-paid 3,130 current and former employees a total of AUD 4.4 million (USD 3.2 million), which includes interest and superannuation, for underpayments that occurred between 2010 and 2018.

Fair Work Ombudsman Sandra Parker said that an Enforceable Undertaking was appropriate as Lush had cooperated with the investigation and demonstrated a strong commitment to rectifying all underpayments.

The Enforceable Undertaking commits Lush to making a AUD 60,000 (USD 43,934) contrition payment to the Commonwealth’s Consolidated Revenue Fund. Lush’s co-operation in rectifying its non-compliance, including making back payments with interest beyond the statutory limitation period, and implementing measures to ensure future compliance were relevant factors in determining the contrition payment, the watchdog stated.