Wesfarmers has been ordered to backpay $4.8 million to more than 3400 underpaid employees across Australia.
Seven of Wesfarmers Industrial and Safety brands that supply industrial, safety and workwear products and services were found to be underpaying employees as a result of a system error.
The businesses include J. Blackwood and Son, Protector Alsafe, Bullivants, the Workwear Group, Coregas, Blacksmith Jacks and Lawvale.
Wesfarmers reported "underpayment issues" by the seven businesses to the Fair Work Ombudsman in 2019 after it found "anomalies while implementing a new payroll system" across the group.
A review found payroll system errors occurred while Wesfarmers rolled out employing entities - a feature in the system allowing for the correct pay slip information for all workers regardless of which business they are employed by - between 2013 and 2014 and failed to fix the mistakes.
As a result, more than 3400 current and former employees including full-time, part-time and casual had been underpaid over 10 years.
Underpaid employees worked in Melbourne, Sydney, Newcastle, Wollongong, Mackay, Canberra, Perth and Darwin.
The roles included retail and customer service, manufacturing, clothing and textiles, engineering management, laboratory technology, transport and logistics.
The businesses underpaid base and overtime penalty rates, annual leave and casual loadings, laundry, first aid and vehicle allowance or reimbursements and termination payments.
An investigation revealed the businesses underpaid employees more than $4.8 million plus $246,779 in superannuation between 2010 and 2020.
Individuals were underpaid by up to $38,362 while the average was $1392.
Now, the Fair Work Ombudsman imposed an enforceable undertaking which is a legal agreement for Wesfarmers and its businesses to backpay employees otherwise they can face court consequences.
The businesses now have to back pay the $4.8 million, the superannuation and a total interest of more than $1.4 million by the end of this month.
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Fair Work Ombudsman Sandra Parker said the Wesfarmers entities now have to conduct audits to check their compliance with workplace laws over the next two years to ensure underpayment errors don't occur again.
"This matter demonstrates how important it is for employers to identify and fix non-compliance in their processes, including the continued use of out-of-date and unsupported software systems and the incorrect interpretation and creation of pay rules," Parker said.
"Businesses who fail to invest the time and resources to ensure they are meeting all lawful entitlements risk facing large-scale back-payment bills."
Wesfarmers Industrial and Safety managing director Tim Bult said the company had repaid all current affected team members and former staff "it has located" and will continue to contact the remaining staff.
Bult said the remediation payments equate to about 0.5 per cent of the total payroll between 2010 and 2019.
"We apologise to all of our current and former team members for the payroll errors, and thank them for their patience as we have worked to resolve the issue," Bult said.
"We have invested considerable resources into changing and upgrading our systems and processes, and we are confident that a similar issue will not occur in the future.
"We will keep working closely with the Fair Work Ombudsman to ensure the matter is fully resolved and that we continue to comply with all of our obligations."
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