The FWO found cleaning contractors were not complying with workplace laws © PA Images
The FWO found cleaning contractors were not complying with workplace laws © PA Images

‘Serious exploitation’ in Woolworths cleaning supply chain

19 February 2018

A Fair Work Ombudsman (FWO) investigation into Tasmanian supermarket cleaning contracts has found “serious exploitation” of workers and “abysmal” record keeping in the Woolworths supply chain.

An inquiry was launched in late 2014 in response to a tip-off that supermarket cleaners in the state were being underpaid. 

The inquiry examined the contacting arrangements for cleaners at all 31 Woolworths stores, seven Coles stores and 17 IGA stores. Woolworths became the focus of the inquiry because it was the only one of the three supermarkets in the state to outsource its day-to-day cleaning operations. 

The inquiry found cleaning contractors at 90% of Woolworths’ Tasmanian supermarket were not complying with workplace laws.

It said it found cases of contractors playing cleaners $7 per hour for training and $14 per hour for work. 

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

“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,” she said. 

She added that overall record keeping by contractors engaged at Woolworths’ sites was “abysmal”. 

“At 84% of sites, workplace records were inaccurate or not kept at all – the impact of record keeping failing is exacerbated by the use of cash payments, which while lawful, make it difficult to determine with any certainty the extent of underpayment of wages by the contractors,” she said.

“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.”

The FWO also found that while cleaning performance of the contractors was regularly checked and scored by Woolworths, the supermarket’s approach to procurement and oversight of its cleaning contracts contributed to a “culture of noncompliance”. 

James said Woolworths failed to monitor its contractors to ensure policies around identification cards, use of visitor books and auditing were being followed, exposing cleaners to potential health and safety risks and exploitation.

“Woolworths should have been putting the same effort into monitoring its contractors’ compliance with workplace laws as it did into scrutinising the cleanliness of their stores,” she said.

“It is not enough for businesses to simply have governance systems in place if they do not follow up to check that contractors within their networks are complying with those systems.” 

The FWO said as a result of the inquiry it had so far identified more than $64,000 in underpayments, with $21,000 now repaid. It has initiated two litigations and referred three contractors to the Australian Taxation Office concerning cash payments and misleading or false tax declarations.

The report noted that none of the cleaning contractors identified in the report still work for Woolworths and that the supermarket has introduced mandatory third-party audits for all cleaning head contractors in the past three years. 

The ombudsman recommended Woolworths expand its Proactive Compliance Deed it entered into last year after similar accusations of abuses in its trolley collection network, to include its cleaning supply chain. 

It has also called on Woolworths, Coles and IGA to become members of the industry-led Cleaning Accountability Framework.

A Woolworths spokesman said the supermarket would “continue to work closely with the FWO as we incorporate enhanced management of our cleaning contractors throughout Australia”. 

“We’re also committed to paying cleaners if they’re found to be underpaid for cleaning services provided to Woolworths and where the relevant subcontractor employing entity fails to rectify the underpayments,” he said.

He added that Woolworths would roll out a number of new processes for cleaning services across the country this year, including the requirement that all contractors use a third-party payroll system, an increase in the number or audits each year and an ongoing training programme to ensure head contractors understand their requirements under the Fair Work Act and all employees understand their rights.

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