The importance of performing due diligence on contractors has been highlighted by the Fair Work Ombudsman (FWO) taking court action against Coles over an alleged $143,000 underpayment of trolley collectors in Adelaide.
The court action will seek penalties against Coles, as well as three individuals alleged to have been involved as contractors of trolley collection services, for their roles in alleged multiple underpayment-related breaches of the Fair Work Act.
The FWO alleges that four Indian males, who were in their early twenties with limited English language skills, were underpaid a total of $143,558 between October 2009 and July 2011 for performing trolley collection services at Adelaide’s West Lakes shopping centre.
According to FWO allegations, Coles contracted the Starlink companies to provide trolley collecting services at West Lakes and knew that the contracting prices it paid to them would result in the undercutting of minimum wage rates for trolley collectors.
“Turning a corporately-sanctioned ‘blind eye’ to outsourced work that is performed by another enterprise using contractors on below-award rates of pay may expose enterprises up the procurement chain to liability,” said Fair Work Ombudsman Nicholas Wilson. “All parties should undertake due diligence when outsourcing work to contracted workers, particularly to lowest-cost providers, to ensure lower costs are attributable to efficiencies in the business and not due to the potential exploitation of workers on below-award rates.”
The FWO alleges that Sydneysiders Nidal Albarouki (owner of trolley collecting companies Starlink International Group Pty Ltd and Starlink Operations Group Pty Ltd), and Louis ‘Clency’ Ferriere (general manager of the Starlink companies) sub-contracted the trolley collecting service to Mr Al Hilfi – who then employed the trolley collectors on a casual basis and paid them as little as $7.34 an hour.
This rate of pay is well below the $16 per hour that the FWO claims the trolley collectors should have been paid during normal hours, and the $34 per hour that they should have been paid for overtime, weekend and public holiday work. The FWO alleges that the four trolley collectors were underpaid $61,048, $45,795, $20,096 and $16,619.
“The Fair Work Ombudsman alleges that Mr Albarouki and Mr Ferriere knew that the sub-contracting prices Starlink companies paid to Mr Al Hilfi would result in – or would be likely to result in – Mr Al Hilfi undercutting minimum wage rates,” a FWO statement said.
“A statement of claim lodged in the Federal Court also alleges that Coles had reason to believe – or at least suspect – as early as 2009 that Mr Al Hilfi was underpaying the trolley collectors employed at West Lakes.”
In a damning assessment of Coles’ efforts to comply with fair work legislation in this case, the FWO has pointed to court documents alleging that Coles was “wilfully blind” to the underpayments – and did not take action to prevent them.
“In cases where we believe breaches of workplace laws have occurred, we are committed to scrutinising the commercial processes behind those breaches and holding any involved parties to account,” said Wilson.
Coles faces maximum penalties of $33,000 per breach, the FWO said, and the three individuals facing maximum penalties of $6,600 per breach.
The FWO is also seeking a court order for Mr Al Hilfi to rectify the alleged underpayments and additional penalties against Mr Al Hilfi for allegedly failing to issue pay slips and keep proper employment records.
The Starlink companies were placed into voluntary administration in December last year, which prevents the FWO from prosecuting them.
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