Jewellery retailer Michael Hill (ASX: MHJ) has announced that it owes employees between $10 million and $25 million in remediation payments.
The group discovered this remuneration discrepancy when conducting a review into its Australian retail employment contracts and rostering practices.
The company says it was non-compliant with some requirements of the general retail industry award for "a number" of the company's store-based workforce in Australia.
"The reviewrevealed a historic misapplication of the Award across selected sample groups of team members over a number of years," says Michael Hill.
The retailer will now complete a more detailed review of employee records, rostering practices and payments. This review is expected to take several months to complete.
"I'm committed to engaging with our team members transparently and with absolute integrity and fairness," says Michael Hill CEO Daniel Bracken (pictured).
"When we identified there was an issue, I mobilised a team, supported by independent external experts, to determine the scale of the problem, identify the individuals affected and to ensure full compliance with the Award going forward".
"We will move as quickly as possible to rectify any under-payments with those team members affected. I will be in contact with all team members today to apologise on behalf of the Company and to provide an outline of the process we are following to establish who is impacted."
While the remediation payments are expected to be between $10 million and $25 million the company says that this will not materially impact the group's underlying earnings for FY20 and beyond.
This announcement comes as the retailer released a trading update for 4Q19 this morning, showing flat growth during a tough period for Australian retail.
Same store sales were flat during Q419 at 0.1 per cent growth, but e-commerce saw a boost of 43.6 per cent on FY18 to $16 million for the full year.
The Australian segment finished the year with total same store sales of -5.9 per cent, a recovery from 1H19 of -8.8 per cent.
Ten new stores were opened and eleven closed during the year, leaving the company with 306 stores at 30 June.
Bracken says the group's financial year was positive considering the state of Australian retail.
"Even though we are experiencing an extremely competitive retail environment, particularly in Australia, with intensive competitor clearance related activities and lower foot traffic, the company has continued to deliver improved sales momentum for the fourth quarter," says Bracken.
"While we have seen some of our competitors responding with deep discounting and store closures, Michael Hill is now well positioned as we head into FY20."
The company intends to release its complete full year results on Friday 16 August 2019.
Shares in Michael Hill are down 5.26 per cent to $0.54 per share at 10.38am AEST.
Business News Australia