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In December 2022, The Sydney Morning Herald revealed that online fashion retailer The Iconic underpaid hundreds of staff a total of about $1 million over a seven-year period. It is also alleged that certain staff were required to work in extreme conditions at the company’s warehouse, to the point where – in some cases –it’s alleged that their skin turned blue from the cold. But, to what extent will customers hold the brand accountable for allegations of misconduct – especially when it
en it offers a good deal?
According to a statement provided to Inside Retail by The Iconic, an internal review of the company’s payroll systems identified underpayments and overpayments of casual employees – with 814 current and former employees impacted between 2013-2020.
The matter was disclosed to the Fair Work Ombudsman (FWO), with 95 per cent of these employees repaid in full, with the amount totalling $1.38 million.
The brand states that it hasn’t been able to get in contact with the remaining 42 former employees, who are owed a total of $54,9991 during this period. The figure includes interest, superannuation contributions and lost earnings on super.
If these employees aren’t able to be identified, the brand will apply to the FWO to have unclaimed monies paid to the Commonwealth Consolidated Review. This process will ensure that – if the employees come forward at a later date – they can obtain back-payments by contacting the organisation. The brand is not seeking to recover any overpayments.
“The Iconic deeply regrets that this occurred and has apologised to all of the employees involved,” it said.
“[We] continue [to] update and strengthen [our] payroll and HR information systems and regularly conduct internal payroll reviews to ensure accuracy and compliance with relevant awards.”
Regarding workplace safety, The Iconic states that the wellbeing of its people – and the models it works with – is paramount, and it takes its obligations to provide a safe workplace very seriously.
As part of this commitment, the brand undertakes occupational health and safety audits and workplace inspections on a regular basis, including the monitoring of internal temperatures at all its facilities.
The Iconic adds that the audits found that its facilities comply with thermal comfort standards as required by Safe Work NSW. But, in keeping with its commitment to take employee concerns seriously, it is proactively installing infrared heating across the entire facility, which is set to be completed by the end of January 2023.
“During warmer months, we have heat management plans in place and have installed large industrial ceiling fans, as well as wall fans to support cooling,” The Iconic said.
Transitory and short-lived
Professor of marketing and consumer behaviour at Macquarie University Jana Bowden believes that underpaid wages are a problem across the industry.
She cites a record $532 million in unpaid wages and entitlements that were recovered for 384,000 workers by the Fair Work Ombudsman in 2021-2022. There were recent allegations of underpayment by companies including Lovisa, Aldi and Woolworths.
Professor Bowden tells Inside Retail that negative headlines about underpayments damage brand reputations – both externally and internally.
“For many, this represents a brand transgression, and we know from consumer psychology that negative information looms larger than positive information in consumers’ minds,” she said.
“Consumers may start to critically compare the brand’s stated values against their actions in order to assess if a disconnect or discrepancy seems to exist.
Similarly, employees start to question the work culture and the extent to which their employer can be trusted.”
However, she believes that the effects of this news is likely to be transitory and short-lived, because The Iconic is a juggernaut that delivers value, and offers a one-stop-shop experience for consumers.
“Consumers and especially Gen Z and millennials want to shop [at] retailers that are ethical and they are looking for brands that align with their own values. But [they are] also savvy deal-seeking shoppers on the hunt for value,” she said.
She added that the brand has done a good job in addressing the allegations.
“They owned the error, they self-reported the underpayments to the Fair Work Ombudsman, they rectified the temperature regulation at their main venue, they’re conducting regular workplace condition audits and their CEO Berchtold issued a formal apology to the public,” she said.
“Clear and proactive service recovery steps like these help to restore positive perceptions of the brand and in turn these steps also restore public trust.”
“Profit over worker wellbeing”
According to Retail and Fast Food Workers Union president Jessica Barnes, the allegations regarding The Iconic tell a story which is all too common in retail.
She believes it’s a story of toxic culture and of a business that was prioritising profit over worker wellbeing.
“Wage theft is endemic in retail. This is something RAFFWU has been fighting against since its inception [and] as we’ve seen time and again, workers will need to continue to fight for safe working conditions and correct pay,” Barnes said.
Barnes adds that The Iconic must change the culture that enabled these allegations to occur.
“A fish rots from the head down. For there to be any real change, the management responsible must go,” she said.
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