The Senate Education and Employment References Committee Wage theft? What wage theft?! The exploitation of general and specialist cleaners working in retail chains for contracting or subcontracting cleaning companies November 2018 © Commonwealth of Australia 2018 ISBN 978-1-76010-807-6 (Printed Version) ISBN 978-1-76010-807-6 (HTML Version) This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License. The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/. Members Chair Senator Gavin Marshall ALP, VIC Deputy Chair Senator Slade Brockman LP, WA (from 10 September 2018, Deputy Chair from 11 September 2018) Members Senator Catryna Bilyk ALP, TAS Senator Mehreen Faruqi AG, NSW (from 21 August 2018) Senator Deborah O'Neill ALP, NSW Senator James Paterson LP, VIC Substitute Members Senator Andrew Bartlett AG, QLD (for Senator Hanson-Young on 19 July 2018) Senator the Hon Doug Cameron ALP, NSW (for Senator Marshall on 19 July 2018 and 25 July 2018 and for Senator Bilyk on 18 October 2018) Senator Jane Hume LP, VIC (for Senator Gichuhi on 19 July 2018) Senator Sue Lines ALP, WA (for Senator O'Neill on 19 July 2018) Senator Nick McKim AG, TAS (for Senator Hanson-Young on 25 July 2018) Senator Jim Molan AO, DSC LP, NSW (for Senator Paterson from 5 November 2018) Participating Members Senator the Hon Doug Cameron ALP, NSW Senator the Hon Eric Abetz LP, TAS Former Members Senator Lucy Gichuhi LP, SA (Deputy Chair until 10 September 2018) Senator Sarah Hanson-Young AG, SA (from 19 June 2018 to 21 August 2018) iii Secretariat Mr Stephen Palethorpe, Committee Secretary Ms Natasha Rusjakovski, Principal Research Officer Ms Kimberley Balaga, Senior Research Officer Ms Kate Campbell, Senior Research Officer Ms Ariane Lloyd-Pitty, Senior Research Officer Mr Matthew Hughes, Research Officer Ms Jade Monaghan, Administrative Officer Committee web page: www.aph.gov.au/senate_eec PO Box 6100 E-mail: [email protected] Parliament House Ph: 02 6277 3521 Canberra ACT 2600 Fax: 02 6277 5706 iv Table of contents Members ............................................................................................................................................. iii List of Recommendations ............................................................................................................... vii Chapter 1—Introduction .................................................................................................................... 1 Conduct of the inquiry ................................................................................................. 1 Structure of the report ................................................................................................... 2 Acknowledgment .......................................................................................................... 2 Notes on references ....................................................................................................... 2 Chapter 2—Background ..................................................................................................................... 3 A high risk industry for the exploitation of workers ............................................... 3 Chapter 3—The exploitation of cleaners in Woolworths' supply chain ................................. 11 Non-compliance in supermarkets in Tasmania ...................................................... 11 Effectiveness of Proactive Compliance Deeds ......................................................... 16 Limitations of the Cleaning Accountability Framework ....................................... 27 Chapter 4—Parallels in the public sector ..................................................................................... 31 Links with non-compliant companies ...................................................................... 38 Chapter 5—Growing fragmentation of employment relations ................................................ 43 Effectiveness of the accessorial liability provisions of the Fair Work Act ........... 46 Collective bargaining ................................................................................................. 52 Chapter 6—Additional measures to address non-compliant behaviour ................................ 55 Pyramid subcontracting ............................................................................................. 55 Misuse of labour hire arrangements ......................................................................... 58 Illegal phoenixing ........................................................................................................ 60 Chapter 7—Additional measures to assist vulnerable workers ............................................... 65 Outreach to culturally and linguistically diverse communities ........................... 65 Protections for visa holders ........................................................................................ 69 Findings from the Wage Theft in Silence report ..................................................... 72 Role of unions in protecting vulnerable workers .................................................... 76 Coalition Senators' Dissenting Report.......................................................................................... 81 Appendix 1—Submissions and additional information ........................................................... 85 Appendix 2—Public hearings and witnesses .............................................................................. 89 v Appendix 3—Speak Up flyer provided by Woolworths Group .............................................. 93 Appendix 4—Proposed amendments to the Fair Work Act 2009 by WEstjustice Community Legal Centre ....................................................................................... 97 vi List of Recommendations Recommendation 1 2.30 The committee recommends the Government take immediate steps to protect vulnerable workers subject to wage theft and exploitation by companies who continue to operate with impunity. Recommendation 2 2.31 The committee recommends that upon receipt of the final report of the Migrant Workers' Taskforce, the Government: immediately publicly release the report along with the Taskforce's Progress Report; and within a month, publicly release its response. 2.32 The committee further recommends that the Government take into account the evidence and recommendations of this committee's report in preparing its response to the Migrant Workers' Taskforce report. Recommendation 3 3.73 The committee recommends that the Fair Work Ombudsman, when negotiating future proactive compliance deeds, cease determining arbitrary cut off dates for underpayment recovery schemes, but rather set appropriate timeframes so that all instances of non-compliance can be captured and rectified. Recommendation 4 3.74 The committee recommends that the Fair Work Ombudsman provide Woolworths with the contact details of the Tasmanian cleaners impacted by underpayments so that Woolworths can contact these individuals directly to begin the repayment process. Recommendation 5 3.75 The committee recommends that Woolworths immediately reassess the methods and resources it is using to communicate with cleaners affected by non-compliant behaviour to make it clearer that recourse is available to them and take steps to properly determine the scale and impact of wage theft and non-compliance in Woolworths supermarkets across the nation. vii Recommendation 6 3.89 The committee recommends that the Government not solely rely on voluntary measures such as the Cleaning Accountability Framework to address the gaps in legal protections for workers. Recommendation 7 4.41 The committee recommends that the Australian National Audit Office conduct a performance audit on the extent to which Commonwealth entities are using public resources in an ethical manner in compliance with the Commonwealth Procurement Rules. Recommendation 8 4.42 The committee recommends that the Department of Finance immediately renegotiate the contract with Broadspectrum in order to properly account for the previous working conditions of the cleaners. Recommendation 9 4.57 The committee recommends the Department of Finance broaden the Commonwealth Procurement Rules to preclude a tenderer from entering a contract with any corporation or an associated entity that has been penalised on more than one occasion for being non-compliant with any employee entitlement laws. Recommendation 10 5.43 The committee recommends that for consistency the Fair Work Act 2009 be amended to extend the protections for vulnerable workers from franchise arrangements to other business models such as subcontracting and labour hire arrangements. 5.44 In particular the committee recommends that the Fair Work Act 2009 be amended so that a person (whether an individual or a corporate entity) should be liable for an employer’s contravention of the National Employment Standards, an industrial instrument, the rules concerning the payment of wages or the keeping of records, or the prohibitions on sham contracting, where the person: has a significant degree of influence or control over the employer’s affairs, or over the wages or employment conditions of the relevant employee(s); knew or could reasonably be expected to have known that the contravention (or a contravention of the same or a similar character) would occur; and viii cannot show that they have taken reasonable