Non-compliance in supermarkets in Tasmania
In February 2018, the Fair Work Ombudsman (FWO) released a report with the findings of its inquiry into the procurement of cleaners in Tasmanian supermarkets (FWO report). The report found non-compliance with legal obligations by cleaning contractors at 90 per cent of Woolworths' sites in Tasmania. The FWO report ultimately concluded that Woolworths' approach to procurement and the oversight of its cleaning contracts contributed to this culture of non-compliance.
The FWO inquiry formally commenced in November 2014 and occurred in two phases. In the first phase, FWO inspectors visited 15 Woolworths and Coles supermarket sites throughout Tasmania to speak with cleaners and examine records. These sites were chosen based on specific intelligence indicating serious non-compliance. Phase 2 of the inquiry focused on 55 supermarket sites (comprising 43 per cent of Tasmanian supermarket sites), including:
thirty-one Woolworths supermarket sites;
seven Coles supermarket sites; and
seventeen IGA supermarket sites.
As Woolworths was the only major supermarket retailer outsourcing its day‑to-day cleaning services, the procurement arrangements at Woolworths sites became the chief focus of the inquiry.
The FWO inquiry identified particular pressures associated with the supermarket cleaning sector that determined whether a cleaning business retained its contract. For example, the expectation that cleaners will be required to work late evenings and early mornings, and that the cleaning is to be completed in short timeframes at minimal cost. The FWO report detailed other pressures present in the sector:
Workers engaged to clean supermarkets are also subject to a high level of scrutiny in relation to the store cleanliness by the supermarket management and the public. A cleaner is required to scrub, mop and polish the floors, as well as clean windows, toilets (public and staff), lunchrooms, store-rooms, staff offices and car parks.
Cleaning is physically demanding work and it is not uncommon for cleaners to be afforded approximately two to three hours to complete duties to the specifications detailed by the supermarket. Cleaning performance is regularly checked and scored. If scores for the store are at an unacceptable level in any area cleaners are asked to explain why and what they will do to rectify the situation. It is not uncommon for cleaners to report that they do not consider they are afforded sufficient time to complete all the required specifications to a high level.
The FWO report also highlighted that a majority of cleaners interviewed by inspectors during site visits in Tasmania were:
unable to provide details as to the nature of their engagement (e.g. status of employment, identity of employer);
unwilling to advise how much they were being paid;
paid a flat rate for all hours worked;
unaware of the applicable penalty rates under the Cleaning Services Award 2010;
unable to provide a clear indication of the business which employed them (except to provide a first name and sometimes a mobile number of the person they reported to); and
from overseas or of a non-English speaking background.
As a result of its audits, the FWO discovered non-compliance with the Cleaning Services Award 2010 by contractors at 90 per cent of Woolworths' sites in Tasmania. It also uncovered a range of breaches resulting in total underpayments of over $64 000. In addition to payment contraventions, rostering and payslips and record keeping breaches were also identified.
The FWO report summarised a range of deficiencies in Woolworths' procurement and oversight of its cleaning services:
The inquiry found that at the time Woolworths’ approach to procurement and oversight of its cleaning contracts had contributed to a culture of non‑compliance characterised by:
significant underpayment of cleaners
multiple levels of subcontracting in breach of the direct terms of Woolworths’ own service agreements
networks of corporate structures reliant on the engagement of vulnerable workers
inaccurate and/or false records
difficulties in identifying the true employers of labour within a supply chain
inadequate monitoring and identification of who is cleaning each site.
The FWO report also emphasised that the dollar figure of underpayments was likely much greater than was able to be calculated:
…it is estimated that the total underpayment quantum is much greater [than the $64,162.54 calculated], as Fair Work Inspectors were impeded in quantifying employees’ entitlements by poor record-keeping, incomplete, inaccurate and / or false records, and a lack of cooperation from workers. In this respect, the inquiry observed links between the employees’ level of vulnerability, for instance their visa status, and their willingness to provide evidence.
Additionally, the FWO report highlighted that Woolworths' on-site identification protocols were often breached in relation to cleaning staff. As a result, Woolworths had no means of verifying who was entering their stores to clean each day and night:
The inquiry found it is Woolworths’ policy to require all visitors, including cleaners, to sign a visitors’ book, recording people in the store at any given time. The inquiry found that this requirement and enforcement of it is often ignored with respect to cleaning staff. No evidence was provided to the FWO of a particular contractor being penalised or questioned about breaching the visitors’ book protocol.
Cleaners often signed the visitors’ book with the principal contractor’s company name. Consequently, the inquiry found it difficult to identify the true employer of cleaning labour at a particular site, date and time.
Inconsistent use of the visitors’ books made it very difficult for the inquiry to verify the accuracy of contractor and sub-contractor records and contributed to the sense of an ‘invisible workforce’.
The FWO report further highlighted that cleaners often did not wear or were not properly issued with identification cards, and that Woolworths did not keep accurate records for all employees of subcontractors:
The FWO’s site visits also found that identification cards were not worn by the cleaning staff as required by Woolworths, and that this was not monitored. Woolworths was unable to provide copies of all the identification cards that should have been issued to all cleaners working in the stores visited by inspectors. Some cleaners advised inspectors that they worked in Woolworths stores without having completed the relevant induction as required. With no record of them working in the sites, cleaners were open to potential work health and safety risks and exploitation by subcontractors.
While identification cards are issued to cleaners after completing an induction, the inquiry found that Woolworths did not keep accurate records for all employees of subcontractors. The inquiry further found that temporary identification cards could simply be printed off by a sub-contractor and no records were kept of these either. This made it very easy for workers to enter Woolworths sites with no accurate records of them ever performing work.
Ultimately the FWO report concluded that Woolworths had failed on a number of fronts to ensure that its supply chain for cleaning services was legally compliant:
The findings of this inquiry indicated that while Woolworths had measures in place to manage the risks of non-compliance in its supply chain relating to cleaning services (for instance, auditing, visitors’ books, identification and limits of contracting), the company failed to invest in ensuring these measures were complied with.
By not actively checking to ensure that its principal contractors were complying with the terms of the service agreements, Woolworths failed to properly manage its labour supply chain at the time.
Woolworths also failed to appreciate the dynamics of the market below the principal contractor level.
Based upon the FWO’s observations and experience of other labour supply chains, there is little utility in establishing governance arrangements if they are not going to be enforced by active, regular and frequent management interventions.
In practice, the terms of the service agreements Woolworths had secured with its principal contractors were ‘optional’.
The FWO advised that its inquiry had led to three referrals to the Australian Taxation Office concerning cash payments and misleading or false tax declarations, as well as four individuals or entities in the Woolworths' supply chain being subjected to ongoing legal proceedings.
Additionally, on 24 August 2018 Woolworths entered into a proactive compliance deed with the FWO. A proactive compliance deed is a mechanism used by the FWO to formalise its compliance partnership with a business to 'ensure their systems and processes are working effectively to build a culture of compliance'. The FWO explained that it encourages employers that want to publicly demonstrate their commitment to 'compliant, productive and inclusive' Australian workplaces to enter into partnership agreements with it.
The Woolworths Group Cleaning Services Proactive Compliance Deed (the deed) stated:
Both parties have agreed to enter into this Deed as a proactive compliance partnership as a means to prevent or eradicate exploitation and underpayment in the supermarket cleaning services industry, and to further develop and implement sustainable self-monitoring and compliance arrangements.
Under the deed, Woolworths has agreed to report regularly to the FWO on its progress in:
ensuring employee records are accurately maintained by contractors including through photo identification of employees and improved timekeeping systems;
rectifying underpayments by requiring the primary contractor to back-pay substantiated claims or, when this has not occurred within 20 business days, through an ex gratia payment by Woolworths;
annual audits of contractors conducted by independent expert auditors;
requiring all contractors to agree to make payments to employees by EFT (electronic fund transfer) and not cash, except in exceptional circumstances;
investigating and resolving referred complaints in a timely manner;
maintaining an Internal Compliance Team to conduct unannounced compliance checks of contractors;
promoting accountability at all levels of the supply chain by requiring the primary contractor to enter into a written contract containing prescribed terms with the subcontractor;
ensuring contract prices are sufficient to meet minimum employee entitlements;
promoting the multi-language Speak Up Service which allows contractors, employees and members of the public to report potential non-compliance; and
providing ongoing training to ensure all employees and employers on Woolworths sites are aware of their workplace rights and obligations.
A detailed examination on the effectiveness of this deed is contained in the next section of this chapter.
Effectiveness of Proactive Compliance Deeds
As set out in earlier in this chapter, on 24 August 2018 Woolworths entered into a proactive compliance deed with the FWO. This was in response to a FWO report on the procurement of cleaners in Tasmanian supermarkets which found non‑compliance with legal obligations by cleaning contractors at 90 per cent of Woolworths' sites in Tasmania.
The FWO explained that proactive compliance deeds are documents that it uses to formalise its compliance partnerships:
Compliance partnerships give employers and their staff certainty their systems and processes are working effectively and help build a culture of compliance. Compliance partnerships also provide opportunities for franchise operators and head contractors to work with their franchisees and sub-contractors to drive workplace improvements throughout their supply chain.
Mr Andrew Howarth, Compliance Manager for Facilities Management at Woolworths informed the committee that working directly with the FWO seemed like 'the logical and best idea' for the business:
The idea is that we will work with the Fair Work Ombudsman on an ongoing basis over the next three years minimum to improve our processes.
On 11 October 2017 Woolworths entered into a separate and very similar proactive compliance deed with the FWO to address problems of non‑compliance in Woolworths' trolley collection contracting arrangements.
Maurice Blackburn Lawyers (Maurice Blackburn) and United Voice submitted that there were 'several significant limitations' inherent in the Woolworths Group Cleaning Services Proactive Compliance Deed (the deed). These included:
an unnecessary limitation of repayment of entitlements;
an unfair onus of responsibility for determining and claiming underpayments; and
inadequate processes to ensure responsible subcontracting.
Unnecessary limitation of repayment of entitlements
In regard to the first of these limitations, the deed only directs Woolworths to:
ensure, to the extent possible, that Employees who have been underpaid since 1 July 2014 are paid their full employee entitlements due to them under Commonwealth Workplace Laws; and
require Contractors to ensure that their current and future Employees at each Woolworths Site receive the full entitlements due to them under Commonwealth Workplace Laws.
Maurice Blackburn and United Voice pointed out that by imposing a limit of 1 July 2014, despite Woolworths' acknowledgment that there were compliance issues identified as early as 2010, Woolworths was denying cleaners who were underpaid before that time their rightful entitlements. The two submitters noted that the similar 7-Eleven underpayment recovery scheme was not time‑limited.
The committee sought further information from both Woolworths and the FWO as to why the 1 July 2014 timeframe was chosen.
Mr Howarth of Woolworths advised that the 1 July 2014 date was 'put in the deed' by the FWO. He noted, however, that Woolworths had undertaken to look at claims of underpayment outside of that time frame:
If somebody comes to us with a claim that was pre that [1 July 2014], we will investigate it and look at it. In our calculations, when we are doing investigations and so forth, we do not cut it off at any particular period of time. We will research the whole period of employment time frame.
Mr Michael Campbell, Deputy Fair Work Ombudsman (Operations), gave his justification for the mid-2014 cut off point:
Our view was that the 2014 period was a period that was marked with particularly poor governance on behalf of Woolworths with regards to its supply chain and cleaning arrangement, and that it was appropriate to ensure that the deed reached far back enough in time to capture that period, so that if workers were underpaid we were able to use the mechanisms that the PCD [proactive compliance deed] provided to recover those underpayments for them where we were unable to.
Ms Sandra Parker, Fair Work Ombudsman, further explained that the date was chosen in order to 'capture the greatest number of employees as efficiently as we can':
I think we've explained at previous hearings that it is really difficult to get evidence going back many years. Part of what we weigh up as a regulator is to try to get money back as quickly as we can. As you say, these are low‑paid workers. We want to get them their back payments as fast as we can. Part of that is to say, 'What is the easiest and quickest way to do that with the evidence that's in front of us?' It was our assessment that this was a fair and reasonable date.
Ms Parker further stated that as the negotiated deed only related to Tasmanian workers, the FWO was 'pretty happy' that Woolworths had undertaken to consider claims from their cleaners across all sites nationally.
When Woolworths was pressed by the committee as to why, if it had undertaken to look at all underpayments, it had simply accepted the 1 July 2014 date proffered by the FWO and not amended it during negotiations, Mr Cameron Sinclair, Public Policy Manager for Woolworths answered:
We were trying to be cooperative and we were trying to be expedient to Fair Work. In addition to what is stated in the deed, we have given a clear undertaking that we will cooperate and consider any claim for underpayment that comes to us.
On 7 November 2018, Woolworths and the FWO signed a deed of variation to the original proactive compliance deed to amend the timeframe for the rectification of underpayments. The variation made reference to the committee's inquiry:
The [24 August 2018] Proactive Compliance Deed currently places obligations on Woolworths to ensure, to the extent possible, that Employees who have been underpaid since 1 July 2014 are paid their full employee entitlements due to them under Commonwealth Workplace Laws.
In the period since the Proactive Compliance Deed commenced operating, Woolworths has given evidence in relation to the operation of the Proactive Compliance Deed before the Senate Education and Employment References Committee (Senate Committee) which is conducting the Senate Inquiry into the exploitation of general and specialist cleaners working in retail chains for contracting or subcontracting cleaning companies (Senate Inquiry)
During the course of the Senate Inquiry, Woolworths gave evidence to the Senate Committee that it would consider claims from Employees or former Employees for Underpayments pre-dating 1 July 2014 with a view to securing rectification of the same under the processes outlined in the Proactive Compliance Deed.
The parties wish to vary the Proactive Compliance Deed to reflect the commitment made by Woolworths in C above.
The committee also sought further information from Woolworths as to how it was administering the process for rectifying claims of underpayment. Mr Howarth advised that the deed meant that Woolworths was taking on responsibility for rectifying outstanding payments to cleaners:
We have made a commitment that we will rectify any underpayments that our contractors or our head contractors do not. The contractual agreement that we have with our contractors is that any underpayments that are identified are, as a first point of call, their responsibility to fix, as we have paid the correct rates to enable the right award to be passed down. If, for some reason, they do not honour that and do not rectify the underpayment, then we have made a commitment to step in and honour that payment.
Woolworths later reiterated that it 'expects the contractors will make good on any underpayments in the first instance':
The repayment of underpayments is the responsibility of the head contractor. If the head contractor does not pay, then Woolworths will make the payment and seek reimbursement from the head contractor via our contractual process.
Woolworths provided material that indicated the process was coordinated through a service called Speak Up, run by Deloitte. In order to access information or begin the process to claim repayment, a cleaner must call or email Speak Up, or use the Speak Up website which requires a Woolworths specific user name and password.
The Speak Up flyer used by Woolworths and provided to the committee can be seen at Appendix 3 of this report. The flyer stated:
As part of Woolworths' continuous efforts to improve transparency and accountability, we have introduced an additional way in which potential misconduct can be identified and reported – the 'Speak Up' service…
It should be used if you believe that your dealings with any Woolworths' business division, Employees or Service Provider/Contractor may have created or are likely to create issues such as;
Paying under the modern award
If you are experiencing or know of any of the above issues, contact the 'Speak Up' service. Calls can be anonymous…
Calls made to the Speak Up service will be logged by specially trained operators at Deloitte who are used to dealing with sensitive information. Each concern is then escalated to a senior nominated Woolworths' representative to investigate.
The committee also requested details of how Woolworths had advertised to cleaners that the underpayment rectification process was available. Woolworths advised that it had:
run advertisements in three newspapers on 18 September 2018 (The Australian Financial Review, The Australian and The Hobart Mercury);
published a notice on the Woolworths website on 18 September 2018;
placed a notice on Woolworths public notice boards and team notice boards;
sent correspondence to head contractors advising of their legal requirements and requesting they pass the details of Speak Up to all cleaners;
sent Speak Up flyers to stores to be handed out to all cleaners in May 2018 and November 2018; and
ensured their Field Services Coordinators carry Speak Up flyers to hand out to contractors and cleaners during their visits.
The committee notes the complex language used in the advertisements and the fact that they were only run in English-language newspapers. The committee view at the end of this section contains a further assessment on Woolworths' efforts to effectively inform cleaners who were underpaid.
Woolworths informed that committee that as at 23 October 2018 it had received only seven requests for assistance from cleaners. It stated that it had not repaid any of those cleaners, as its contractors had rectified the identified underpayments. Because of this, Woolworths was unable to provide the committee with a total figure of how much had been repaid, as in some cases the disputed amount was 'unknown' to Woolworths.
When queried as to whether it or its contractors had sought to contact all individuals in Tasmania who may be eligible for repayment, Woolworths answered:
Woolworths received the names from Fair Work [FWO] of the individuals in Tasmania who were underpaid on the 4th September however we are yet to receive the contact details of the individuals. Fair Work has advised it is seeking approval from the cleaners to pass on the details to Woolworths. We have subsequently requested this information and once received will make contact with each of them.
Mr Trent Mason [General Manager, Facilities Management, Woolworths] contacted the previous Fair Work Ombudsman (Ms Natalie James) prior to her vacating the role [in July 2018] and requested the information. It was after this we received the names but not the contact details. We are still following this up regularly.
Unfair onus of responsibility for determining and claiming underpayments
In regard to the second of the aforementioned limitations of the deed put forward by Maurice Blackburn and United Voice, the two organisations commented:
The Woolworths deed puts the onus on workers to come forward and claim their entitlements, rather than on Woolworths to pro-actively determine repayments, notwithstanding the fact that the FWO's report acknowledged that most of the cleaners they encountered in the Tasmanian audit were "reluctant to provide specific information that would lead to their employer 'getting in trouble' with the FWO"...
They further commented on what was a 'deeply imperfect restitution process':
With only $21,332.37 worth of entitlements having been recovered for Woolworths' cleaners at the date of publication of the FWO's report in February 2018, it is clear that this is a deeply imperfect restitution process. There is little reason to believe these vulnerable workers will, as a result of this deed, feel empowered to come forward to navigate a potentially complex process with no documentation.
Inadequate processes to ensure responsible subcontracting
In regard to the third limitation identified, that of inadequate processes to ensure responsible subcontracting, Maurice Blackburn and United Voice argued that it was 'manifestly inadequate' that the deed did not place substantive limits on subcontracting. They explained that as contracting beyond a single-tier dramatically raises the risks of non-compliance and underpayment, it should only be permissible in highly limited circumstances (beyond the specialist cleaning context). They listed the safeguards that should be in place to ensure that the high risk of non-compliance is minimised:
agreed pricing schedules established in collaboration with a range of stakeholders;
independent monitoring processes;
change of contract processes that preserve job security;
worker engagement processes; and
maintenance of a register of subcontractors.
Maurice Blackburn and United Voice also highlighted that the deed does not ensure that contract pricing is sufficient to maintain safe productivity levels. They noted that high workloads are a critical problem in the cleaning industry, which leads to some of the highest rates of occupational injury. They also emphasised that contract prices should also be sufficient to cover 'non-wage costs', such as public liability insurance, equipment, materials and administration.
Ultimately Maurice Blackburn and United Voice concluded that the deed was a 'missed opportunity to re-set the relationship between Woolworths and the cleaning workforce' and initiate new arrangements to ensure that the cleaners that work in their stores are employed on fair and lawful terms in the future.
Evidence received during the inquiry clearly demonstrated the ineptitude and distinct lack of care from Woolworths in managing its supermarket cleaning arrangements in Tasmania.
In particular, the committee considers the FWO finding that Woolworths had no idea who was entering and cleaning its Tasmanian stores to be extremely damning. Such behaviour is highly indicative of the disinterest and incompetence that characterised Woolworths' handling of its store cleaning arrangements in Tasmania.
Without evidence to the contrary, the committee can only assume that this appalling situation is replicated across the country.
Additionally, the committee considers that Woolworths' lack of oversight on its cleaning arrangements was demonstrated early in the inquiry when it admitted to the committee it did not maintain a list of the names and contact details of subcontractors engaged by its head contractors to clean its stores.
That a huge corporation such as Woolworths, part of a duopoly in the Australian grocery market and with 995 sites nationwide, does not maintain a list of the contact details, let alone the names, of the many subcontractor entities engaged to clean its stores every day and night, is incredible. The committee is mystified by such a massive oversight on Woolworths' part.
The committee considers that Woolworths' use of such fragmented cleaning arrangements to be a deliberate cost-cutting measure which utilises flaws in the existing legal framework, and enabled the corporation to turn a blind eye to the exploitation of low-paid cleaners.
The committee notes that Coles, Woolworths' main competitor, in general does not outsource its store cleaning, but has instead directly employed its cleaners since 2014, and unlike Woolworths had no adverse finding made against it by the FWO.
The committee is of the strong opinion that proactive compliance deeds are not an effective response to the exploitation of workers, particularly where the offending behaviour is shown to be systemic and an embedded workplace practice.
In the committee's view, proactive compliance deeds do not constitute a significant enough deterrent to businesses that may contemplate exploiting their workers, or lead firms who ignore the non-compliant behaviour of their contractors in order to reap financial benefits.
In particular, the committee takes issue with the FWO setting arbitrary cut off dates for underpayment recovery schemes, rather than insisting on schemes that are not time-limited. If workers were underpaid their rightful entitlement, it should not matter when that underpayment occurred.
The committee is extremely concerned about the message being sent to the community if a business sees that it can rip off its workers, and if caught by the FWO and asked to enter into a proactive compliance deed, only be held financially liable for a fraction of its underpayments.
If this is the 'punishment' meted out to exploitative businesses and lead firms, then non-compliance with the Fair Work Act 2009 becomes a calculated and rational business decision.
In relation to the specific proactive compliance deed between Woolworths and the FWO for cleaning services, the committee considers that it has been merely designed to work within the current inadequacies of the laws. As a result, the committee considers this specific deed, as well as the approach that informed it more generally, to be deficient in a range of areas.
The fact that in the deed Woolworths acknowledges that it 'has a moral and ethical responsibility' to ensure that all entities and individuals directly involved in the conduct of its enterprise comply with the law clearly demonstrates that under the existing Fair Work Act, there is no legal responsibility for Woolworths to ensure this. Indeed, Fair Work Ombudsman Ms Sandra Parker confirmed this at a hearing, noting that 'Woolworths had no legal liability'.
The committee agrees with the views expressed by Maurice Blackburn and United Voice on the deficiencies of the deed. The fact that the initial deed contained a time limitation on the repayment of entitlements (i.e. only available to workers underpaid since 1 July 2014) was far from ideal. That the responsibility for determining and claiming underpayments falls to cleaners is also not appropriate.
The committee acknowledges that Woolworths promised to rectify underpayments that occurred before 1 July 2014, if situations were brought to its attention. The committee is pleased that Woolworths and the FWO renegotiated the proactive compliance deed and signed a variance on 7 November 2018 to formally reflect this promise.
If such a variation had not occurred, the committee would have recommended in this report that Woolworths and the FWO immediately renegotiate the terms of the Woolworths Group Cleaning Services Proactive Compliance Deed to amend the timeframe for addressing underpayments back to 2010 (rather than 1 July 2014) to capture when the non-compliant behaviour was first identified.
The committee urges Woolworths to continue to work with the FWO in order to actively contact all Tasmanian cleaners affected by underpayments to ensure these individuals are rightfully recompensed.
In regard to the underpayment rectification process, the committee is aware of Woolworths' efforts to communicate that process to cleaners.
However, the committee considers that a vague, poorly designed and verbose flyer about Speak Up (see Appendix 3), which does not state explicitly that individuals may be eligible for underpayment, to be an extremely paltry attempt at communication.
Given the widely known fact that the cleaning workforce is largely made up of vulnerable workers, often culturally and linguistically diverse individuals with English as a second language, the committee considers the use of such unprofessional printed material, as well as an extremely confusing website, and a small print newspaper advertisement, which as far as the committee is aware is only available in English, to be not 'fit for purpose'.
Additionally, given the strict branding and professional standards that are apparent in all other Woolworths-related public communication material, the committee is incredulous at the obvious and deliberate lack of care demonstrated in the material aimed at communicating with cleaners.
The committee considers the use of such ill-suited resources to be totally incongruous with Woolworth's claim that they are seriously seeking to rectify the non-compliant behaviour found in its cleaning supply chain.
The committee believes that if Woolworths were serious in its attempts to assist cleaners to recoup their rightful entitlements, an obvious first step would be professional, 'fit for purpose' resources which communicate clearly in plain English (and other languages, as set out in the FWO Proactive Compliance Deed) what underpaid cleaners are entitled to and how they can access it.
If Woolworths is committed to facilitating the repayment process in good faith, the committee urges Woolworths to immediately reconsider the ways in which it attempts to communicate with cleaners to ensure that the process is as accessible, transparent and effective as possible.
On the whole, the committee considers that Woolworths has gotten away with its inept managing of its cleaning supply chain with little accountability and no serious repercussions.
The committee notes that Woolworths has not disciplined, demoted or terminated any of its management staff over the serious shortcomings that came to light in its governance and contract management processes.
The committee considers the proactive compliance deed between the FWO and Woolworths to be a missed opportunity for Woolworths to do the right thing and recalibrate the relationship between it as a powerful, influential company, and the individuals, many in vulnerable demographics, who are contracted to clean Woolworths' stores each day and night.
In summary, the committee views the actions of Woolworths in managing its cleaning arrangements for its Tasmanian stores as a highly indicative case study highlighting the 'all power, no responsibility' mindset that plagues some businesses under the current legislative framework.
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.
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.
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.
Limitations of the Cleaning Accountability Framework
Woolworths advised the committee that it had joined the Cleaning Accountability Framework (CAF). Mr Howarth explained:
The thing that impressed us about CAF is that it's a model that, essentially, audits and has a star rating for the business on how they manage the contractor. It challenges businesses like Woolworths to be better, to be a part of this agreement and CAF, so that we can help them clean up—pardon the pun—the cleaning industry.
The CAF is an independent, multi-stakeholder association that aims to improve labour standards and end worker exploitation in the cleaning industry through a supply chain certification approach. Although currently in a 'trial and pilot stage', it has developed 'social compliance standards' based on a three star (legal compliance), four star (better practice) and five star (best practice) model and is confident it will attract a strong membership.
Ms Poonam Datar, Chief Executive Officer of the CAF, provided further detail on the certification process and the pilot phase of the program:
To put it on the record, we have 10 pilot sites that we have been looking at. Essentially we are talking about site certification. As the first step, the building owner or property manager would nominate the site for certification. The next step would be a site-level meeting with the participants who are on that site. That might include the building owner, the facility manager and the cleaning company, and United Voice and CAF would be there to talk about what that process is going to entail. The next step would be an audit. You could almost call that a two-pronged audit approach, where one part is based on documentary evidence. That is undertaken by an independent auditor. They will come out and assess payroll, make sure tax and super payments are being made, and assess workplace policies and procedures on the site.
The second part of it is the worker engagement side of things. I would say that is almost a social audit that we are undertaking. This is about engaging the cleaners in the process to ensure that, if there are issues on a site, those are rectified before that site achieves certification or to make sure there aren't any issues on that site. That is a key component of what we are doing, because we want to include the cleaners' voice within the certification process and also have that as the ongoing compliance piece of certification.
Once a report is drafted on the base of what has been determined through the evidence checks and worker engagement, a certification panel that CAF convenes assesses those results and, on that basis, can decide whether that site has achieved the level of certification, be it three, four or five stars.
The CAF written submission set out the background to the development of the voluntary framework:
CAF developed as a response to the ‘race to the bottom’ mentality inherent in the cleaning services industry which has led to non-compliance with labour regulations, poor quality cleaning services, irresponsible contracting and unreasonably low contract prices. These practices have ultimately resulted in high levels of industrial non-compliance and exploitation of vulnerable workers.
It further explained that it wanted companies that adopted 'best practice procurement models' to be appropriately recognised:
CAF recognises that in order to improve practices in the cleaning industry, we need to adopt a whole of supply chain approach with the aim of levelling the playing field. By setting appropriate standards and benchmarks at the outset – i.e. at the point of procurement – good labour and service practices, as well as a sustainable business model should follow. There are leading companies who are adopting best practice procurement policies who should be recognised for their efforts.
The committee queried the chair of the CAF, Mr Anthony Beck, on whether the existence of the CAF indicated that there was a lack of effective measures in the Fair Work Act to prevent cleaners in supply chains from being exploited:
Senator CAMERON: Isn't the issue of the Cleaning Accountability Framework really a demonstration that there is a lack of effective legislation in this area?
Mr Beck: I think the short answer is yes.
Senator CAMERON: I suppose if workers had access to recourse other than a voluntary organisation, if the system worked effectively, there wouldn't be a need for Cleaning Accountability Framework.
Mr Beck: I agree with that.
Submitters who expressed support for the CAF also acknowledged that if the workplace laws were operating properly, there would perhaps be no need for a voluntary system such as the CAF.
For example, the Australian Council of Trade Unions (ACTU) emphasised:
The CAF is a valuable initiative which the ACTU supports. However, as a voluntary scheme, the CAF cannot possibly replace a legal framework that allows employees to meaningfully negotiate with the entity that determines their pay and which makes that entity legally responsible for their protection. The existence of the CAF should not be used as an excuse to not take further steps.
The committee considers that the very existence of the CAF demonstrates that the current system of regulation is failing.
The committee argues that if the current laws were sufficient and there were adequate regulatory measures in place, there would be no need for the CAF at all.
Although the committee commends the CAF's trials, and acknowledges that it may lead to some improvement, it does not see the CAF as a primary solution to the problems of exploitation plaguing the contract cleaning industry.
The committee is of the opinion that as the CAF is a voluntary initiative, it will not attract the kinds of unscrupulous companies who engage in wage theft and other kinds of non-compliant behaviour.
As such, the committee thinks that while the CAF may be a useful supplement to target non-compliance in the cleaning industry, it cannot be relied upon to address the shortcomings of the actual compulsory, legal protections for workers. This is because there will always be rogue, exploitative operators who choose to function outside of the legal, and most certainly voluntary, compliance frameworks.
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.
The committee notes that under the current legislative framework the CAF is a positive but inadequate approach to dealing with wage theft and worker exploitation in the cleaning industry.