A letter to our staff
We want to tell our staff about a serious mistake we’ve uncovered in the business, to apologise, and to tell them how we are going to put it right. We want to assure our staff that jobs are safe, but we have unearthed huge compliance issues in our payroll system that have resulted in many staff being underpaid for years.
We want our staff to know that we would never knowingly underpay them – this was not deliberate – and it goes against everything we value and believe in, and we are so sorry to have let them down in this way.
Last August a concern was brought to us by Support Team members, which lead to a series of investigations over the following 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 it was a far more significant issue with our payroll system than we originally thought.
At this point we knew we needed expert help, so we began working with the National Retail Association. They conducted an extensive review of our whole business which was completed this month. We’ve also been working with payroll experts, Roubler, to roll out a new compliant payroll system to guard against this happening again.
We can reassure our staff that these underpayments have nothing to do with overtime rates paid for late night trade or our weekend and Public Holiday penalty rates which we chose not to cut. The problems have to do with intricate elements of the the Retail and Manufacturing awards, which our very manual payroll system was just not sophisticated enough to interpret correctly.
For example, sometimes correct rates were not applied when staff did not have two consecutive days off, when shifts were worked without the minimum 12 hour break in between, when staff worked more than 11 hours in one day, when part-timers worked outside their contracted pattern of work without sufficient documentation in place and when our manufacturing production assistants were incorrectly classified.
Now this is our fault. We should have had far more respect for your pay and upgraded our payroll infrastructure to keep up with the growth of our business. Knowing what we know now, it was irresponsible to imagine such an outdated system would work for a company our size. But since realising just how big these compliance issues are, we’ve worked relentlessly to put things right and ensure they don’t happen again. And there’s a few stages to this…
So, first of all, we want to reassure our staff we will be paying back every person who has worked for LUSH Australia, under a Modern Award, every cent they are owed with interest. We estimate the total back payments to be collectively about $2 million, and we have already set that money aside for as soon as the calculations are done. We wanted to not just recalculate your pay, but to do it in a way that allows our staff to look at your work and shift history and see how the new calculations were made. In order to have a system that allows this level of transparency we’ve invested $1.5 million for external payroll experts to build a system onto which 200,000 of your old handwritten timesheets will be scanned, indexed and entered so that the last 8 years of payroll can be re-run accurately.
Depending on which Award our staff fall under and their pattern of work, the amounts of back pay each person is owed will vary greatly, with some being owed nothing at all.
But whether it’s $1 or $1000 our staff will be paid any money owed, plus interest. The back pay process has started and the payroll service provider are working as fast as they can, but this is not an overnight task. We are confident that verified calculations will begin to be paid out towards December.
We’re committed to connecting with every employee who’s been affected by this, past and present, dating back to the introduction of the modern awards in 2010, so we can make sure everyone is paid what they’re entitled to. So if our staff know somebody who worked for LUSH in that time, please ask them to register their details through our website. Current staff don’t need to do this. Roubler will also help us track down past employees and if we’re not able to find them we’ll entrust their back payment to the Australian Tax Office, so their money is always there should they come forward in the future.
As our staff are aware, this week we begin rolling out a new, compliant payroll system that will interpret the Awards automatically and ensure the correct rates are paid to our staff moving forward. We’ll do parallel testing to begin and as an additional safeguard we’ll be audited weekly by the National Retail Association until we have total confidence that the way we interact with the system ensures our staff are paid correctly.
We’re announcing all this to our staff first, before we announce to the wider community later today. We’ve also reported the compliance issues to the Fair Work Ombudsman and the relevant Government departments and we want to work with all of them, and Unions, to sort this situation out as quickly and transparently as possible. We think we’ve got a good plan in place but we’re very open to their contributions, and yours.
We know our staff put their heart and soul into LUSH, and it’s our staff, along with our customers, who drive our business, fuel our growth and make it the vibrant place it is. We don’t take our team for granted and we never underestimate the amazing work they do. We know we’re far from perfect, but we always strive to do the right thing, so that our staff can continue to feel proud of the work they do, and the company they helped to build.
And finally, the most important part – we are sincerely sorry that this has happened. It was a huge mistake, we’ve got no one but ourselves to blame and we do not want our staff to be affected further as we work towards putting it right. We will do everything in our power to keep LUSH strong, profitable and provide a secure job for our staff. As always, we can only do this thanks to your energy and enthusiasm. We hope our staff can forgive us for this monumental mistake, that our they’ll work with us as we put this right and remain part of the LUSH family as we try to build a brighter future.
As always, both of us are available to answer your questions anytime. We’ll be travelling around the country to speak to management teams and any available staff in the coming weeks. There’s a supporting video and information pack with detailed information and our contact details are on the Family Tree if our staff want to call or email us anytime.
Mark Lincoln & Peta Granger – Directors