Coles supermarket © Press Association Images
Coles supermarket © Press Association Images

Ignorance no defence for worker exploitation

Adam Leach is a freelance business journalist
15 March 2016

Businesses found to be indirectly exploiting workers through third-party contractors will be forced to face and pay penalties for their part in the process, according to Australia's Fair Work Ombudsman.

The warning that pleading ignorance to exploitation or illegal practices of contractors will not hold water follows a victory for the regulator over a contractor to retailer Coles, which underpaid staff by up to 79% of what they were owed.

A ruling in the Federal Court found the directors of the now liquidated Starlink and Starlink Operations had held back a total of AUS$220,000 in wages from 10 trolley collectors working at the supermarket's Adelaide operations.

Following the ruling, ombudsman Natalie James stated any business that tried to hide behind exploitation in its supply chain by pleading ignorance will be brought to order.

“While they may think they have contracted out the responsibility, the community and the law can hold them to account if it turns out they are benefiting from black market labour,’ she said.

James added big business should ensure any savings and efficiencies delivered by contractors are not achieved at the detriment of workers through exploitation or holding back of wages.

“It is important to ensure the lower costs are achieved through legitimate means, such as enhanced efficiency or economies of scale, and not due to exploitation of vulnerable workers paid below the lawful minimum rates,” she said.

Through the findings of the six-year long investigation, the regulator forced the supermarket to set up a AUS$500,000 fund to manage the repayment of any parties underpaid by third-parties. It also obliged the company to compile an annual report on any incidents or findings of exploitation and actions taken.

Since the agreement in October 2014, the company has back-paid a total of AUs$41,030 to seven collectors, audited the wages of 400 collectors and brought trolley collection in-house at 558 of its 776 stores.

Andy Coleman, operations and supply chain director at Coles said: “We believe it is vital to ensure fair practices apply to all team members at our stores and believe positive relationships with our team members are essential for our business.”

The company has committed to continuing to work with the ombudsman to improve compliance.

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