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Fair Work Ombudsman enquiry uncovers 'rampant exploitation' of Woolworths cleaners

Cleaning contractors at 90% of Woolworths' Tasmanian supermarket sites have not always complied with workplace laws. This is one of the findings of the Fair Work Ombudsman's enquiry into the procurement of cleaners in Tasmanian supermarkets, whose report was released yesterday.

The report reinforces the importance of the FWO's ongoing focus on businesses, improving its supply chain governance after successive enquiries have revealed a correlation between multiple levels of subcontracting and workplace breaches.

FWO's Natalie James says that the enquiry report shows how alarming levels of exploitation can occur where supply chains involving vulnerable workers are not adequately monitored.

The enquiry, which commenced in late 2014 in response to intelligence received by the FWO that supermarket cleaners in the state were being significantly underpaid, looked into contracting arrangements for cleaners at all 31 of Woolworths' Tasmanian sites, as well as seven Coles sites (44% of Coles' Tasmanian sites) and 17 IGA sites (21%). The focus on Woolworths sites was due to it being the only retailer of the three operating in Tasmania outsourcing its day-to-day cleaning services.

"Our enquiry found deficiencies in Woolworths' governance arrangements with regard to its procurement and oversight of cleaning contracts, resulting in serious exploitation occurring at multiple levels of its cleaning supply chain," states Natalie.

"We uncovered breaches across 90% of Woolworths' Tasmanian sites, including cases of contractors paying cleaners as little as $7 per hour for training and $14 per hour for work - well below their legal entitlements."

(Ed: having done a quick check, the hourly pay for work should be $18.29 and the training rates - which are a fair bit less, vary depending upon variables such as age and status of trainee).

Natalie says that the that cleaners were often paid in unrecorded cash-in-hand payments with no payslips provided.

"Overall, record-keeping by contractors engaged at Woolworths' sites was abysmal: at 84% of sites workplace records were inaccurate or not kept at all," she states.

"The impact of record-keeping failings is exacerbated by the use of cash payments which, while lawful, make it difficult to determine with any certainty the extent of underpayment of wages by the contractors.

"Such blatant and widespread breaches of workplace laws are clearly unacceptable, and echo the findings of our previous enquiries into supply chains employing low-skilled and vulnerable workers."

To date, the enquiry has identified more than $64,000 in underpayments, with more than $21,000 of these having been rectified. However, poor record-keeping; incomplete, inaccurate or false records; and a lack of cooperation from vulnerable workers impeded the FWO's ability to quantify the true amount of underpayments.

To date, the FWO has initiated two litigations as a result of the enquiry and has also referred three contractors to the Australian Taxation Office concerning cash payments and misleading or false tax declarations. Investigations into a number of businesses that supply cleaning services to Woolworths in Tasmania remain ongoing.

In recent years the FWO has conducted enquiries into labour procurement arrangements of the Baiada Group, procurement of housekeepers by four and five-star hotel groups and trolley collection services procurement by Woolworths. Following this latest enquiry, it recommends that the deed be expanded to also cover Woolworths' cleaning supply chain.

In particular, the agency recommends that Woolworths commits to back-paying underpaid cleaners who have not had those underpayments rectified by the relevant contractor; and conduct regular audits of its contractors to ensure compliance with workplace laws.

"While we acknowledge that Woolworths has since taken steps to improve compliance within its labour supply chain, it is clear from our findings that at the time of the enquiry a culture of non-compliance was prevalent amongst contractors on its sites," says Natalie.

"While it is primarily the direct employer's responsibility to ensure its workers are receiving their proper entitlements, once again I must emphasise that responsibility in a supply chain involving vulnerable workers goes all the way to the top.

"I am pleased that since the commencement of the enquiry, Woolworths has implemented improvements in its governance arrangements and is continuing to work constructively with my agency to make further positive changes."

The FWO is calling on Woolworths, Coles and IGA to become members of the Cleaning Accountability Framework external-icon.png, an industry led initiative which promotes the adoption of best practice throughout the cleaning supply chain to improve labour and cleaning standards in Australia.

"Major companies must take the lead in promoting a culture of compliance with workplace laws, beginning with their own contracting networks," says Natalie. "Through joining the Cleaning Accountability Framework and certifying its supermarket sites, the major retailers can lead the sector in modelling best practice."

With regard to specific issues identified at Woolworths sites, the enquiry found that Woolworths' approach to procurement and oversight of its cleaning contracts at the time had contributed to a culture of non-compliance within its supply chain.

While Woolworths' agreements with its contractors only allowed for one level of subcontracting, the enquiry found that Woolworths failed to regularly check that this requirement was being followed.

In addition, Woolworths failed to monitor its contractors to ensure policies around identification cards, use of visitor books and auditing were being followed, exposing cleaners to potential workplace health & safety risks and exploitation by subcontractors.

Cleaning performance of contractors, on the other hand, was regularly checked and scored by Woolworths.

"Woolworths should have been putting the same effort into monitoring its contractors' compliance with workplace laws as it did into scrutinising the cleanliness of their stores," challenges Natalie.

"It is not enough for businesses to simply have governance systems in place if they do not follow up to check that contractors within their networks are complying with those systems.

"Businesses need to step up and be active in their responsibility to ensure that workers in their supply chains are being paid appropriately and treated fairly."

The enquiry report details the physically demanding and highly scrutinised nature of the work undertaken by supermarket cleaners across the industry, with cleaners telling Fair Work Inspectors that they were often not allocated enough time to complete the tasks as directed to the standard required.

The enquiry was informed of one alarming case where cleaners had been locked in a store overnight to complete a strip and polish and were unable to leave until the duty manager arrived at the store the next day.

While the store was not connected to the three supermarkets subject to the enquiry, a common contractor was involved. The Fair Work Ombudsman referred the matter to Worksafe Tasmania.

Natalie notes that the cleaning sector often attracts overseas workers with limited English-language skills and little experience working in Australia, who can be vulnerable to exploitation and can be reluctant to speak up if something is wrong.

A number of overseas workers interviewed as part of the enquiry told inspectors that they felt they would lose their job if they spoke out about their employer and would struggle to find more work.

"We see too many cases of vulnerable workers engaged in low-skilled work in supply chains of major companies being exploited," confesses Natalie.

"The community expects large reputable businesses to make sure that the rights and entitlements of workers within their supply chains are safeguarded," she says.

"We will be continuing to shine a light on this issue and urge businesses to step up and commit to working with us to stamp out cases of worker exploitation occurring in their networks."

The Fair Work Ombudsman has a range of resources to help businesses monitor and manage their contract relationships. Four practical guides are available at:


15th February 2018

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