GBU 200 Woolworths Underpayment Of Staff In Australia: Ethical and Legal Issues Assessment Answer

WOOLWORTHS UNDERPAYMENT OF STAFF IN AUSTRALIA IN 2019

1. Stakeholders in this case

The major stakeholders of this case are the employee who faced this issue, Woolworth's authority and the HRM department of the company. In 2019, Woolworths had underpaid their 5700 staff which was unethical (Theguardian, 2020). Therefore, those underpaid staffs are the major stakeholders in this case. The HRM department of the company had the responsibility to take care of the matter of payments of the staff's company which they did not maintain. That is why the human resource department of Woolworths is another stakeholder in this case. Moreover, the senior authority of Woolworths needs to concentrate on the activities of the HRM department in order to avoid this case. Therefore, the Senior Authority of Woolworths is one of the stakeholders. 

2. Ethical and legal issues in this case and their impact on the customer and society

The major ethical issues of this case are dishonesty, unfairness and inequality. Woolworths did not follow all this ethics in their business in 2019. Due to inequality, 5700 staffs were underpayment in the year. This incident reflects the dishonesty of the company.

In Australia, there is a fair work act of 2009 which comprises a number of policies to ensure the fairness of employment in Australia. This act provides rules regarding the payment matter of the employees too (Creighton et al., 2017). In Woolworth's underpayment of staff case, the company did not follow this act. Apart from this, the Employment and labour law act of 2020 provides rules regarding the minimum pay rate and employment conditions also (Iclg, 2020). This act is also not followed by the company in this case.

Hollander, (2019) in the research work depicted that Utilitarianism is an ethical theory which is based on the consequences of choosing any action or policy over others. That is why in the context of this theory, it can be said that the authorities of Woolworths choose dishonesty and unfairness over honesty and fairness ethics in business. As a result, they encountered the underpayment issues of the employees which impacted on their customer growth and on the society as well.

3. Role of the company culture in ethics

Ethical decision making plays a crucial role in the corporate culture of any organization. As corporate culture defines the way in which an organization conducts its work, therefore, it is highly related to the ethical regulations. The ethics are generated to consider the culture of the company.  In this case, the role of management is vast as they apply ethics to manage the organizational culture properly. 

The role of the company’s culture in this incident

As per the marketers of Woolworths, the company follows ‘down-to-earth’ organizational culture as they celebrate family-friendly values. In this way, Woolworths is committed to hard work and integrity. The work culture if Woolworths is mainly based on strict ethical values. Though Woolworths provides a flexible work culture to their employees still the rules of the company are very strict. As a result, when the workers check their pay packets after the completion of their work, they discover that they are underpaid. 

4. Company’s policies on ethics and corporate social responsibility

The company has specific rules to maintain its code of conduct by its employees. There is a ‘ways-of working guide’ of the company that defines how the business operation of the company maintains. The company has safety, health and wellbeing policies for their employees (Woolworthsgroup, 2020c). Apart from this, the company restricts the unlawful discrimination in the workplace.

The corporate social responsibility of Woolworths has been designed to impact on Australia's economy, environment and community. The CSR of 2020 of Woolworths focuses to minimize the effect of their business operation in the environment of Australia (Woolworthsgroup, 2020b).

In the underpayment case of Woolworths of 2019, the code of conduct of the organization has not followed the code of conduct of Woolworths states that the company has transparency and honesty in their payment process of the employees which is not followed by the company in 2019 and as a result, 5700 staffs were underpayment. 

5. Persons who are responsible for ethical decisions in this case

The managers of the companies are responsible for the ethical decisions of the business because they uphold the ethics in their action and activities. In addition, managers of the company follow professional ethics as per their roles and responsibilities. Therefore, the manager of Woolworths is most responsible for the ethical decisions of the company. That is why in this underpayment issue the manager did not follow professional ethics and generated issues. Apart from him, the manager of the Human resource department is also responsible in this case as the HRM department takes care of the payment of companies. As they also did not follow professional ethics, the underpayment issue of the employees of Woolworths is raised.

6. Impact of the incident on the company's reputation and brand 

The underpayment issue of Woolworths has impacted on the reputation of the company negatively. As per the authorities of the company, this issue has impacted on their pride or goodwill because they always prioritize their employees first, but this issue proved it wrong. This issue has affected the brand value of the company in the Australian market. The brand value of Woolworths which is $11.8 billion depicts that the growth rate is very low (Businessinsider, 2020). For this reason, the customer number of Woolworths was decreased evenly. As a result, in 2019, the annual income of the company was only $59,994 million (Fool, 2020).

7. Regulatory and customer’s reaction to the incident

The fair work ombudsman was shocked due to this scandal of Woodsworth in 2019 as Woolworths is one of the largest and leading supermarket companies in Australia (Theguardian, 2020). The national secretary of SDAE association described this scandal as “enorousmos'' underpayment issues (Theguardian, 2020). Moreover, the senior authorities of Woolworth stated that they unreservedly apologise to all the people for this case.

This issue has impacted on the customer growth rate of the company as after this incident it has been observed that the customer growth rate is very low. In the consequences, this issue has overshadowed the sales growth of Woolworths. Moreover, the annual report of Woolworths depicts that in 2018 there were 29 million customers, three in 2019 there were 30 million customers of the company which defines low customer growth (Woolworths, 2020a).