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Fast fashion giant H&M is under investigation by the Fair Work Ombudsman (FWO) amid claims that roughly 1,500 of its Australian staff were underpaid, potentially millions of dollars.
The Swedish company, which operates 34 stores across Australia, told SBS News it had launched a “comprehensive remediation process”, including back pay for affected workers, after an internal audit uncovered payroll errors.
SBS News understands the underpayments date back up to nine years, affect around 1,500 workers — both past and present — and could run into the millions.
In an email sent to one former worker and seen by SBS News, H&M said it had conducted a review of its payroll system from June 2016 to October 2024, which identified “discrepancies between how you were paid and what you should have been paid”.
H&M has acknowledged that discrepancies in overtime and penalty rates were the primary contributors to any wage underpayments during their recent assessment period.
The former employee, who worked at H&M for nearly five years and requested anonymity, told SBS News they had been underpaid about $8,000, which they only became aware of after receiving the email.
They said they had spoken with eight former colleagues who were owed between $4,000 and $15,000 each.
“None of us had a single idea we were being underpaid,” they said.
Employees expressed a blend of emotions, stating they were unsurprised by the findings but astonished that they were unaware of the issue.
In a statement provided to SBS, H&M confirmed it had proactively reported these errors and is collaborating with the Fair Work Ombudsman (FWO) and the Shop, Distributive and Allied Employees Association (SDA) to address and resolve the situation.
SBS News understands the problem came to light after the retailer transferred from a paper-based payroll to an electronic system, prompting a review of salaried staff pay that revealed incorrect payments.
All current employees have received correct entitlements, but an online portal has been launched for former workers to register, which has seen significant uptake.
In its statement to SBS, H&M said it had “self-reported identified errors” and was working with the FWO and the Shop, Distributive and Allied Employees Association (SDA) to rectify the issue.
“Our people are our greatest strength, and we recognise the impact this situation has had. We are taking action to repay those affected, with the process already in motion,” it said.
H&M said it had also redesigned its rostering and payroll systems to prevent future errors.
Bernie Smith, the SDA’s NSW Secretary, said H&M had been working with the union to ensure workers were correctly paid.
“This is a case of a company self-reporting where they have identified errors. They have openly worked with the SDA to rectify and remediate any problems,” he said.
The FWO confirmed it was investigating the retailer but declined to provide further comment.
