Woolworths Tasmania contractors underpay cleaners, Fair Work Ombudsman finds

A Fair Work Ombudsman investigation has found the majority of Woolworths’ Tasmanian supermarkets did not comply with workplace laws, resulting in cleaners being “significantly” underpaid. 

An inquiry conducted in late 2014 revealed cleaners were often paid in unrecorded cash-in-hand payments with no payslips  

Fair Work Ombudsman Natalie James said breaches were uncovered in 90 per cent of Woorlworths’ sites in Tasmania, with some contractors paying cleaners as little as $7 an hour for training and $14 an hour for work.  

Ms James said the rates were “well below their legal entitlements”.

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The inquiry investigated the contract arrangements for cleaners at 31 Tasmanian Woolworths stores, as well as seven Coles stores and 17 IGA sites. 

Of the three, Woolworths was the only retailer to be outsourcing its day-to-day cleaning services. 

“Our inquiry 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,” Ms James said.

“Overall, record-keeping by contractors engaged at Woolworths’ sites was abysmal: at 84 per cent of sites workplace records were inaccurate or not kept at all.” 

Failed record keeping was “exacerbated” by the use of cash payments, which Ms James said while lawful, made 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 inquiries into supply chains employing low-skilled and vulnerable workers,” Ms James said.

To date, the inquiry has identified more than $64,000 in underpayments, with more than $21,000 of these rectified. 

But the inquiry found poor record-keeping; incomplete, inaccurate or false records; and a lack of cooperation from vulnerable workers have impeded the Fair Work Ombudsman’s ability to quantify the true amount of underpayments.

Two litigations have been initiated by the Ombudsman as a result of then inquiry, and three contractors have been referred to the Australian Taxation Office regarding cash payments and misleading or false tax declarations. 

Investigations into several businesses supplying cleaning services to Woolworths in Tasmania are ongoing. 

Last year the Fair Work Ombudsman entered into a Proactive Compliance Deed with Woolworths, in which the retailer committed to monitor and regulate its trolley collection network to ensure workers nationwide receive correct pay and entitlements.

This agreement was the result of inquiries by Fair Work into the procurement of trolley collection services. 

The latest inquiry by Fair Work has recommended Woolworths expand the deed to also cover its cleaning supply chain.

Fair Work has also recommended Woolworths commit to back-paying underpaid cleaners who have not had underpayments rectified by the relevant contractor and conduct regular audits of its contractors to ensure compliance. 

“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 Inquiry a culture of non-compliance was prevalent amongst contractors on its sites,” Ms James said.

“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.”

Since the inquiry commenced, Woolworths has improvements in its governance arrangements and is continuing to work constructively with my agency to make further positive changes, Ms James said. 

Fair Work has called on Woolworths, Coles and IGA to become members of the Cleaning Accountability Framework – an initiative which promotes the adoption of best practice throughout the cleaning supply chain to improve labour and cleaning standards in Australia.