Coles’ sub-contractor charged $188,000 for underpayment. McDonald Murholme Managing Director Alan McDonald comments contractors underpaying their staff harms not only the workers involved, but the business community as well.
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Fair Work Ombudsman says it’s time big business “stopped wiping its hands” of contractor underpayments after trolley collectors for major supermarket underpaid $220,000
Two businessmen in charge of a company that provided trolley-collecting services to Coles have been fined $188,000 for their role in underpaying 10 workers more than $220,000.
Sydney-based business Starlink, which is now in liquidation, provided trolley-collection services to several Coles supermarkets in South Australia.
Former director Nidal Albarouki and operations manager Clency Ferriere were penalised a whopping $94,000 each by the Federal Court last week for their role in underpaying the trolley collectors over a period of 18 months.
One migrant employee from India was underpaid almost $90,000.
The Fair Work Ombudsman said in a statement it “worked down three levels” of the Coles supply chain in order to achieve a just outcome for the vulnerable workers.
Coles admitted it had an ethical responsibility to the trolley collectors and signed an enforceable undertaking with the employer watchdog back in 2014.
Natalie James says it’s time big business stopped “wiping its hands” of contractor underpayments
Fair Work Ombudsman James said in a statement last week’s judgement brings to an end several years of legal proceedings.
“It was time big business stopped wiping its hands of the problem with the excuse that it was not the employer,” James said.
“We were not going to build a culture of compliance by merely picking off fly-by-night contractors who quickly liquidated – they are just replaced by new entities which behave in the same manner and are often run by the same people.
“It was time to tie all the players in the supply chain to the problem to find a sustainable solution.”
James said it is promising to see Coles now in-sourcing collection of its trolleys.
“However, last week’s penalty sends a clear message to other sectors operating with supply chain and sub-contractor arrangements that they can expect to be held accountable if any part of their labour networks contravene workplace laws.”
“We are not finished with the trolley collection sector, and if major supermarkets are not already having a boardroom discussion about the governance of their trolley collection services, then someone is asleep at the wheel.”
Alan McDonald, managing director of employment law firm McDonald Murholme, told SmartCompany it is unsurprising the Fair Work Ombudsman is cracking down on third-party arrangements.
“It’s not as if it’s unique to employment law,” McDonald says.
“It goes into tax law and it’s very important.”
McDonald also points out that contractors underpaying their staff is harmful to not only the workers involved, but the business community at large thanks to its effects on competition.
“If you are competing with a company that is operating below the law, then it’s very difficult for you,” he says.
“It’s anti-competitive and we as a business community really frown on anti-competitive practices.”
Coles says it now employs around 2500 in-house trolley collectors
A spokesperson for Coles told SmartCompany the supermarket has made significant changes to its trolley collection service since 2010 when the Fair Work Ombudsman first initiated action against Starlink.
“Coles has transformed its trolley collection service across Australia to eradicate underpayment of trolley collectors, and now directly employs around 2500 team members to collect trolleys at more than 520 stores across Australia,” the spokesperson said in a statement.
“Coles is rolling this direct employment model out nationally. This replaces the previous system where Coles had around 30 contractors engaged to provide trolley collection services.”
In 2014, Coles said all of its trolley collectors would be employed in-house by the end of 2016.
The supermarket giant is still working towards that goal.
Reference: ‘Fair Work Ombudsman says it’s time big business “stopped wiping its hands” of contractor underpayments after trolley collectors for major supermarket underpaid $220,000’, Smart Company, 10th March 2016.