Australia’s largest retail conglomerate Wesfarmers Ltd (ASX: WES) has underpaid workers to the tune of $15 million just days after a similar issue at its hardware retailer Bunnings Warehouse.
A Costly Payroll Error
Wesfarmers once again blamed a payroll error for the PR disaster. It has been revealed that as many as 6,000 current and former team members in its industrial and safety division have been underpaid as far back as 2010.
The $15 million relates to the underpayment of allowances and entitlements throughout the period in question.
The issue is believed to affect workers at a number of businesses that fall under the Wesfarmers umbrella including Blackwoods, workwear manufacturer Workwear Group, and industrial gas supplier Coregas.
In a statement Tuesday afternoon, Wesfarmers said it was now working with auditor Pricewaterhouse Coopers (PwC) to repay affected workers.
A Sorry Mistake
“These were inadvertent errors but they are deeply regrettable and we apologise sincerely and unreservedly to our team members who have been affected over a number of years,” Wesfarmers Industrials managing director David Baxby said in a statement.
“Our priority is to back-pay all affected team members as quickly as possible, including interest, to ensure affected team members are fully compensated,” Baxby added.
“We are also investing heavily in our payroll system, processes and capabilities to fix this issue and ensure it cannot happen again.”
Will This Affect Wesfarmers Shareholders?
The Wesfarmers share price has enjoyed a good run, rising more than 10% in the last three months.
Last week’s news of workers at Bunnings having been shortchanged on their superannuation contributions for a decade had very little impact on the share price. Still, it will be interesting to see if this second incident will be allowed to pass by harmlessly. Wesfarmers shares finished Tuesday up around 1% at $40.19.
This morning I’ll be watching the market reaction closely to see how investors react once they have had the chance to digest the news.
[ls_content_block id=”14945″ para=”paragraphs”]
Disclosure: At the time of publishing, Luke has no financial interest in any companies mentioned.
