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Zara underpaid its workers $2.6 million

Fashion firm Zara is the latest retailer to reveal it has underpaid its workers by an estimated $2.6 million, and is undergoing a remediation program to pay back impacted workers.

In filings with the corporate regulator seen by SMH, the business outlined a review into its store workers pay run by a third party specialist during the year which analysed payments owed under the award system as well as “other monetary entitlements”.

And with the initial impact of the pandemic having hit the fashion sector particularly hard, Zara is now investigating cost cutting methods, though noted parent company Inditex Group is available to offer funding.

“Although there is significant uncertainty surrounding future events, the company’s directors are constantly monitoring the evolution of the situation in order to successfully address any possible impacts, both financial and non-financial, that may arise,” Zara’s local directors said, according to the SMH report.

The Spanish fashion house joins a list of local retailers that have failed their workers, such as Coles, Woolworths and Super Retail Group, among others, due to apparent complexities in Australia’s industrial relations system.

And after the string of underpayments in recent years, government regulators have stepped up their response in an effort to properly punish big business. In 2019, fair work ombudsman Sandra Parker said large companies had been “sloppy” in their payroll practices, and had failed to keep their houses in order.

“They had been previously saying to us that they’re trying to fix it and we should, therefore, leave them alone to get on with it. That’s not what we’re going to do,” said Parker.

And, the NSW Government has outlined its intention to “name and shame” businesses that fail to pay staff properly, while a bill passed in Victoria last year could see employers that deliberately withhold wages, superannuation or other entitlements hit with 10 years of jail time.

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