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Contractor fined after admitting awareness of underpayments to subcontractor's workforce
ISS Facility Services Australia has been fined $132,217 for underpaying overseas workers, following a surprise late-evening visit to Melbourne Cricket Ground by Fair Work inspectors, who questioned the 44 workers cleaning up after a match.
The Fair Work Ombudsman found that 11 of the cleaning team's overseas workers were underpaid $37,471 for work at the MCG after AFL matches in 2014, in individual amounts ranging from $276 to $7272 over five-months.
Although First Group of Companies employed the 11 cleaners and was subcontracted by ISS between 2009 and 2014 to provide cleaning services at the MCG, the Ombudsman used accessorial liability laws to hold ISS lawfully accountable for its part in workers in its supply chain being underpaid.
The Sydney Morning Herald reported that the Court heard that ISS admitted to knowing in 2014 that the rates it paid First Group of Companies were not sufficient to cover the employees' entitlements and that it was aware of the unlawfully low rates that had been paid.
Despite ISS submitting to the Court that it had been a 'third party' to the underpayments, the Judge said that in light of the admissions it was simply incorrect to describe ISS as a 'third party', if the use of that word was designed to minimise or reduce ISS's responsibility for its involvement in the contraventions.
The Ombudsman alleged that First Group of Companies hired the cleaners - most of whom were international students from India, the Philippines, Colombia and Brazil - under sham contracts, treating them as independent contractors despite them being employees. They were paid flat rates of between $18 and $25 an hour which was less than minimum $46 under the Cleaning Industry Award, including penalty rates. The underpayments have now been rectified.
As well as fining ISS, the Judge imposed penalties of $17,926 against each of the former owner-operators of the now de-registered First Group of Companies - Sharad Patel and Sidarth Luthra - for their involvement in sham contracting, frequency of pay and pay slip contraventions by their company.
Fair Work Ombudsman Natalie James said the significant penalties should be a wake-up call to any head contractors who thought they could turn a blind eye to non-compliance in their labour supply chain.
"This case provides a clear example of what can happen if you fail to actively manage your contractors in high risk sectors," she said. "Price-driven procurement that disregards the cost of wages and the dynamics in the market is a recipe for exploitation of vulnerable workers."
31st May 2018