Lush avoids prosecution despite $4m wage ripoff

The multinational company was fined just $60,000 despite ripping off more than 3000 staff over eight years.

Lush has paid back more than $4m to staff who were underpaid. Picture: Sam Rosewarne

Multinational cosmetic company Lush will not be prosecuted after paying back more than $4 million owed to 3130 former and current employees who were ripped off a raft of legal entitlements over eight years.

The Fair Work Ombudsman has agreed that Lush will make a “contrition payment” of just $60,000 for the years of underpayments, citing the company’s co-operation and the impact of the COVID-19 pandemic on the business.

Lush, which manufactures cosmetics at a factory in Villawood, NSW, and sells them online and through stores, self-reported the underpayments to the FWO in 2018.

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

The FWO said 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.

Lush has back-paid 3130 current and former employees a total of $4.4 million, which includes interest and superannuation, for underpayments that occurred between 2010 and 2018.

The underpaid employees worked at the Villawood factory and across stores in Victoria, NSW, Queensland, WA, South Australia, Tasmania and the ACT.

They included production assistants, compounders, sales assistants, retail supervisors and managers.

Fair Work Ombudsman Sandra Parker said that an enforceable undertaking was appropriate as Lush co-operated with the investigation and “demonstrated a strong commitment to rectifying all underpayments”.

“Under the Enforceable Undertaking, Lush has committed to stringent measures to comply with the law and protect its workforce,” she said.

“This includes engaging, at its own cost, an expert auditing firm to audit its compliance with workplace laws over the next three years,” Ms Parker said.

Commenting on the $60,000 contrition payment, Ms Parker said Lush’s co-operation in rectifying its noncompliance, including making back payments with interest beyond the statutory limitation period, and implementing measures to ensure future compliance were relevant factors in determining the amount.

“The FWO acknowledges the significant impact of the COVID-19 pandemic on Lush’s operations,”’ she said.

Lush is required to display public and workplace notices detailing its workplace law breaches, commission workplace relations training for staff with responsibility for human resources, recruitment or payroll functions, review all contracts of employment issued to salaried employees, and operate a Hotline to assist employees for the next three years.