Lush admits to a massive payroll error due to their failure to upgrade their payroll system

We often write on this blog about the importance of auditing your payroll and ensuring it’s always up to scratch, for the sake of your company’s reputation but more significantly, for the sake of your employees. Well, we now have hard proof of why this is so crucial, as demonstrated by popular cosmetics retailer Lush and their massive payroll mistake that came to light last week.

Lush reported themselves to the fair work ombudsman when they realised that there have been drastic payroll errors going on for the past 8 years, resulting in over 5,000 employees being underpaid by a total of $2million. Individuals are owed various amounts, some amounts ranging between $5,000 and $10,000. A ‘national payback scheme’ has been implemented to ensure that the staff get the money they have earned, ‘with interest’.

Lush have specified what went wrong to cause such a colossal error, and it reflects exactly what we preach on this blog: ”What has become alarmingly clear…is that our internal payment systems have not kept pace with our growth. This resulted from a very serious failure on our part to upgrade our internal systems.” Peta Granger, Lush’s national director, makes it clear that a flexible payroll system that grows with your business is integral to accurate payroll. Ms Granger goes on to say that they “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”.

So, there you have it. Evidence from a massive global company (Lush has 900 stores worldwide in 49 countries) that if you don’t pay due diligence to your payroll and invest in a system that grows with your business, the results can be expensive for you and infuriating for your employees.

All that’s left for Lush to do is get their underpaid staff reimbursed as quickly as possible, and apologise. Ms Granger says she is “sincerely sorry for letting our staff down so badly” and that she hopes that they can forgive the “monumental mistake”. Hopefully Lush have learned their lesson and will now implement a payroll system that they and their staff can trust. But in the meantime, studies show that it only takes two payroll issues for employees to look for a new job. Lush’s error went on for 8 years, so only time will tell how this will impact their employee base.