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$2.6m pay scandal could be the end of Zara in Australia

·2-min read
The storefront of a Zara store in Australia
The clothing retailer is re-assessing its future in Australia (Source: Getty)

Clothing giant Zara is considering its long-term future in Australia after it was revealed Aussie staff had been underpaid $2.6 million.

The Sydney Morning Herald reported that the company is thinking about potentially pulling out of the Aussie market to cut costs.

The clothing store hasn't been performing well in the Australian market and at the end of last year had borrowed around $44 million from its parent company in Spain since coming to Australia in 2011.

“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.

  • Also watch: MPs call for adjudicator to stamp out abuses in UK fashion supply chain

Not the first Aussie pay scandal

Zara is not the only company on Aussie shores to underpay its workers, in fact there have been a number of pay stuff-ups in the last few years.

The Department of Finance admitted to underpaying 60 staff over the course of four years, and reported itself to the Fair Work Ombudsman.

Around 60 junior staffers for federal MP’s were underpaid over the course of four years - the affected employees were paid between $51,000 and $68,000 per year.

Also, Providers of the National Disability Insurance Scheme (NDIS) were forced to cough up more than $43,000 after Fair Work Ombudsman investigations found hundreds of workers had been underpaid.

The FWO recovered a total of $43,204 in unpaid wages to 322 employees, the Ombudsman revealed.

The Big Banks are also not immune to payroll mess ups. In March this year Commonwealth Bank was blasted over an estimated $45 million underpayment, due to its failure to allow staff a 10-minute tea break.

Retail workers are entitled to one paid 10-minute break for working three hours and another break for five hours, in addition to an unpaid lunch break, Finance Sector Union national secretary Julia Angrisano said.

And, in July last year Westpac announced that it had underpaid 8,000 staff around $8 million.

The major bank admitted that an internal review unearthed a calculation error that saw long service leave entitlements wrongly calculated, which led to both underpayments and overpayments.

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