Underpayment of MCG workers leads to hefty fine

Fair Work used accessorial liability laws to hold a global cleaning company accountable for its part in the underpayment

Underpayment of MCG workers leads to hefty fine

The Australian arm of a global cleaning company has been penalised $132,217 following a surprise night-time visit to the MCG by Fair Work inspectors to investigate underpayment of overseas workers.

The penalty is the result of the Fair Work Ombudsman (FWO) taking legal action after its investigation discovered 11 overseas workers were underpaid $37,471 for cleaning work at the MCG after AFL matches in 2014.

ISS Facility Services Australia Limited holds a contract to provide a variety of cleaning services at the MCG and is part of the ISS Group which received the penalty in the Federal Circuit Court.

However, since ISS was not the direct employer of the 11 exploited cleaners, the FWO used accessorial liability laws to hold ISS lawfully accountable for its part in the workers being underpaid.

The 11 cleaners were employed by First Group of Companies Pty Ltd, a now-deregistered company ISS had subcontracted between 2009 and 2014 to provide post-event cleaning services at the MCG.

Moreover, First Group of Companies had engaged the cleaners under sham contracts, treating them as independent contractors despite their correct lawful classification as employees.

Fair Work Ombudsman Natalie James said the significant penalties handed down should “serve as a wake-up call” to any head contractors who think they can turn a blind eye to non-compliance by the subcontractors they engage.

“The Fair Work Ombudsman has been warning businesses for years: you can’t turn a blind eye to exploitation of contracted workers in your labour supply chains,” said James.

“This case provides a clear example of what can happen if you fail to actively manage your contractors in high risk sectors.”

James added that the FWO will hold-to-account all those involved in underpayment, from head contractors down, and they risk serious consequences if they fail to take steps to ensure that all subcontractors in the supply chain treat workers lawfully.

“Proving accessorial liability can be complex and I’m pleased that in the cases we have been able to obtain the evidence necessary to hold those involved in breaches of workplace laws to account,” said James.

In Court, ISS admitted 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 First Group of Companies was paying workers. ISS also admitted its conduct contravened workplace laws.

The FWO commenced its investigation into the MCG’s supply chain for cleaning staff in 2014 in response to media reports and intelligence suggesting significant compliance issues.

A key part of the investigation was a team of six Fair Work inspectors making a surprise visit to the MCG after the AFL preliminary final in September 2014 to speak to cleaners.

Once inspectors made cleaners aware of their presence and the purpose of the visit, the workers revealed to the inspectors what they had been through.

The inspectors spoke to about 44 cleaners between about 9pm and just after midnight.

The workers were mostly international students from India, the Philippines, Colombia and Brazil and many said they had obtained work at the MCG through word-of-mouth.

The investigation discovered cleaners were paid flat rates of between $18 and $25 an hour to clean after AFL matches.

The rates failed to meet minimum pay and entitlements under the Cleaning Industry Award 2010, including base hourly rates, casual loading, penalty rates, overtime and allowances.

However, James added that she is pleased that ISS has since taken steps to improve oversight and management of their supply chain, including auditing all of its subcontractors for compliance with workplace laws.

 

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