Revealed: ASX company underpaid staff $2.3 million

Retailer Dusk Group Ltd (ASX: DSK) is now back-paying more than $2.3 million in wages after signing an enforceable undertaking with the Fair Work Ombudsman.

The company, which only listed on the ASX in early November, sells candles and home fragrance products via 115 shops in Australia.

Dusk staff complained last year that the retailer had not properly paid out an entitlement that was triggered when an employee had a break of less than 12 hours between shifts.

The company then found more than 1,500 former and current service staff, assistant store managers and store managers in all states and territories were underpaid.

Some employees are owed as much as $26,000, according to the Ombudsman.

The Motley Fool has contacted Dusk for comment.

Dusk has plenty of remediation to do

As well as back-paying the missing wages, Dusk must pay a $45,000 “contrition payment” to the federal government.

The retail chain must also apologise to its staff via physical media, social media and online notices. A telephone hotline must also be manned using an external provider for 12 months to field employee enquiries.

The enforceable undertaking commits the company to put in measures to prevent future breaches.

“These measures include engaging, at Dusk’s own cost, an expert auditing firm to assess the outcomes of its rectification program and audit its compliance with workplace laws over the next two years,” said Fair Work Ombudsman Sandra Parker.

“This matter demonstrates how important it is for employers to place a high priority on ensuring they are aware of every lawful entitlement they must pay their employees. The underpayment of just a single entitlement can result in a large-scale back-payment bill.”

The company is also paying out interest and superannuation related to the back-pay. It has until 22 February to complete remediation with all former and current employees.

A small-cap ASX share to watch

At the time of writing on Friday, the Dusk share price is trading 3.1% higher at $2.33 giving it a market capitalisation of around $149 million. The business floated on the ASX in November with an initial public offer (IPO) price of $2 per share.

WAM Microcap Ltd (ASX: WMI) last week named Dusk as an ASX share to watch, citing it as a beneficiary of Australians staying home more during the COVID-19 pandemic.

Dusk has forecast sales in the first half of financial year 2021 to land between $90 million to $90.5 million, up from $58.7 million in the same period the previous year.

The company’s earnings before interest and tax (EBIT) guidance was between $26 million to $27 million, which would be a big boost from $9.7 million the prior year.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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