Wages, conditions, safety and entitlements of Working Holiday Maker (417 and
462) visa holders
Evidence throughout this inquiry highlighted the major role of certain
labour hire companies in the exploitation of Working Holiday Maker (WHM) (417
and 467) visa holders. This chapter focuses on the wages, conditions, safety
and entitlements of WHM visa holders, including the role and prevalence of
labour hire companies operating in both the horticulture and meat processing
industries (matters relating to compliance and recommendations around the
regulation of labour hire companies are covered in chapter 9).
The chapter begins by examining the additional factors that contribute
to the vulnerability of WHM visa holders, followed by a brief look at proposed
changes to the tax treatment of WHMs.
The role of labour hire companies in horticulture is then considered. The
bulk of the chapter examines the activities of a web of labour hire companies
supplying labour to Baiada's chicken processing sites in New South Wales (NSW).
This includes evidence of gross exploitation from temporary visa workers
themselves as well as insights from the report of the Fair Work Ombudsman (FWO)
into these matters.
Working Holiday Maker visa program
Evidence from a wide range of submitters and witnesses pointed to the pervasive
exploitation of visa holders other than 457 visa workers. The Migration
Institute of Australia (Migration Institute) noted WHM and student visa holders
were 'consistently reported to suffer widespread exploitation in the Australian
The Migration Institute pointed to demographic differences as a potential
factor in the greater exploitation of WHM and international students compared
to 457 visa workers. The Migration Institute observed that WHMs and students
are 'generally young, low skilled and with lower than average English language
skills' and typically work in low skill, casual occupations. Furthermore, WHMs
and students do not enjoy the same regulatory protections as 457 visa workers:
They are not protected by the Temporary Skilled Migration
Income Threshold (TSMIT) of a minimum $53 900pa as are 457 visa holders
and they usually undertake work that is low skilled, casual or part time and in
occupations or locations where there may be little choice of employment.
Student and Working Holiday Visa holders are often very reliant on any income
they can get for basic living costs. This makes them more willing to accept
jobs that do not meet legislative levels for Australian income, terms and
conditions and safety standards.
The Migration Institute was critical of the requirements attached to the
second WHM visa:
The linking of eligibility for a second WHV to three months
employment in regional areas in industries such as horticultural and
hospitality, has exacerbated the problem of employer exploitation amongst this
In a similar vein, the Australian Council of Trade Unions (ACTU)
recommended that the option of gaining a second year WHM visa should be
abandoned because the requirements for obtaining a second year WHM visa risk
creating the conditions for systemic abuse of backpackers.
By contrast, the Australian Chamber of Commerce and Industry (ACCI)
stressed the economic benefits to Australia of the WHM scheme, in particular
the money spent by WHMs on accommodation, transport and education.
ACCI also remarked on the reciprocal cultural exchange between Australia
and partner countries, and quoted the following statement from the Joint
Standing Committee on Migration inquiry into WHMs, arguing that the sentiments
remain true today:
The working holiday program provides a range of cultural,
social and economic benefits for participants and the broader community. Those
benefits show that the program is of considerable value to Australia and should
continue to be supported.
Young people from overseas benefit from a working holiday by
experiencing the Australian lifestyle and interacting with Australian people in
a way that is likely to leave them with a much better understanding and
appreciation of Australia than would occur if they travelled here on visitor
visas. This contributes to their personal development and can lead to longer
term benefits for the Australian community.
The committee notes, however, that in terms of the reciprocal
arrangements between countries party to the WHM program, the FWO reported that
31 Australians were granted a Taiwanese WHM visa in 2013 compared to
15 704 Taiwanese granted an Australian WHM visa for the same period.
Changes to the tax treatment of
Working Holiday Makers
As noted in chapter 4, the committee received a body of evidence that
WHM visa holders played an important role in the agricultural sector harvesting
perishable goods in regional and remote Australia.
Given WHM visa holders filled a labour supply shortage during peak
season, the National Farmers' Federation (NFF) expressed concern about the
impact that proposed changes to the tax treatment of WHMs would have on the
future supply of WHMs to Australian agriculture.
Mr Tony Maher, Deputy Chief Executive Officer of the NFF, noted that the
2015 Commonwealth budget announced changes to the tax treatment of WHMs. WHM
visa holders are currently treated as residents for tax purposes if they stay
in Australia for more than six months:
This gives them access to the tax-free threshold, the
low-income tax offset and a lower tax rate of 19 per cent for income above the
tax-free threshold up to $37 000.
But from 1 July 2016, WHMs will be treated as non-residents for tax
purposes and will therefore be taxed at 32.5 per cent on all income. Mr Maher
remarked that about 40 000 WHMs work on Australian farms each year
earning, on average, about $15 000 a year in Australia (below the current
tax-free threshold of $18 200).
Mr Maher was concerned that Australian agriculture could face severe
labour shortages if the changed tax treatment caused a reduction in the number
of WHMs visiting Australia. The NFF therefore proposed a compromise that would
see WHMs taxed at of 19 per cent of their income and not be eligible for the
tax-free threshold, and that the changed tax treatment of WHMs be 'deferred for
later consideration as part of the federal government's broader tax reform process'.
Noting that WHMs 'inject more than $3.5 billion into the Australian
economy each year', Mr Maher stated that there was a lot of concern from the
business community that WHMs continue to work in rural and remote Australia
rather than just congregating in major holiday destinations.
The NFF also confirmed that it was not consulted before the government
announced the decision to change the tax treatment of WHMs.
The NFF provided a comparison of the comparable earnings of WHMs (in all
industries) in Australia, New Zealand and Canada, including the hourly rates
and the net hourly rates after tax (see Table 7.1 below). The table shows that
under the government's proposed changes, the net hourly wage of WHMs in
Australia would fall below the comparable rate in New Zealand. But under the
NFF's proposal, the net hourly wage of WHMs in Australia would remain above the
comparable rate in New Zealand.
Table 7.1: Comparable earnings of Working Holiday Makers
Min. hourly wage
Net hourly wage
Source: National Farmers'
Federation, answer to question on notice, 5 February 2016 (received 15 February
Exploitation of Working Holiday Maker visa workers by labour hire companies
in the horticulture industry
Evidence to the inquiry illustrated the different approaches growers in
the horticulture industry used to recruit workers, and the advantages and
disadvantages of the various methods.
Mr David Fairweather stated that Tastensee Farms did not use labour hire
companies, and instead did all their hiring directly via a web page. Mrs Laura
Wells from Tastensee Farms said she used a Facebook page with about 2500
followers to recruit workers.
Ms Donna Mogg from Growcom, the peak industry body for fruit and
vegetable growers in Queensland, pointed out that difficulties arise when
workers do not show up for work. Many growers were therefore tempted to use a
labour hire company because the labour hire company takes responsibility for
ensuring that workers arrive for their shifts.
However, Ms Mogg disputed the assertion that the exploitation of
temporary visa workers was as widespread as the media seemed to suggest:
I say that because we deliver a full and comprehensive
industrial relations advisory service through Growcom, and I would average
around 300 calls from growers every year. These are growers calling me to find
out what they need to do to be in compliance, what their obligations to
employees are and how they better engage with skilling, with local communities,
with local employment coordinators. This is how we know that not every grower
in this state, let alone in this country, behaves in this way.
Nevertheless, Ms Mogg acknowledged that reports of underpayment,
exploitation and abuse of visa workers in horticulture 'are a matter of great
concern' to the industry and to many growers. She also confirmed 'there are a
lot' of 'fly-by-night phoenix operators' and that they are very difficult to
And we do believe that it is the labour hire contractors,
particularly recent entrants to the industry—the dodgy ones from overseas, I
guess—who are causing the significant majority of these problems.
Mr Guy Gaeta, a NSW orchardist, asserted that problems of non-payment
and mistreatment of 417 visa workers in the agriculture sector were associated exclusively
with labour hire companies:
...I represent the New South Wales Cherry Growers Association—I
am in the committee—and I am a delegate to NSW Farmers, and the only problem I
have ever, ever seen with backpackers, with people not getting paid or being
mistreated, is with people that work for contractors.
Mr George Robertson, an organiser with the National Union of Workers (NUW)
stated that the conditions around the granting of a second year WHM visa render
417 visa workers vulnerable to exploitation, particularly by labour hire
But there are a variety of potential problems that can arise
from relying on a particular contractor in order to apply for a second visa. We
have heard stories from members about contractors saying you have to work for
free for X amount of time in order to get a second visa, or you have to provide
sexual favours in order to receive a second visa. That puts workers in a
vulnerable position where their continued presence in the country and their
ability to work and receive a second visa is contingent on whether they agree
with those terms that are provided by the contractors.
Ms Sherry Huang, a former horticulture worker from Taiwan and now an organiser
with the NUW, explained the mode of operation of a labour hire company.
Typically, the owner of a labour hire company in Australia would set up a
labour hire company in Taiwan and then source all the workers from Taiwan. The
labour hire agency would charge 417 visa holders a fee of several thousand
dollars to arrange flights, accommodation, transport, and a job.
Ms Lin Pei (Winnie) Yao heard about a job vacancy at Covino Farms
through a friend and was employed to work there by a labour hire company. She
worked as a casual six days a week for 10 or 11 hours a day at $14 an hour,
with a break and lunch.
Mr Robertson noted the Horticulture Award contains no penalty rates for casual
workers and imposes no restrictions on the hours worked by casuals. However, Ms
Yao was still paid substantially less than the award rate of $21.08 an hour.
Ms Yao never met or spoke to the head contractor from the labour hire
company and never knew the company name. The only contact was by text.
Furthermore, Ms Yao did not receive a payslip, just an envelope with cash
inside. The hours and amount were written on the back of the envelope. Ms Yao
paid no tax. Mr Robertson clarified that 'workers must be provided with a pay
slip that indicates how much they are receiving, how many hours they have
worked, their superannuation and their taxation'. He also noted that in the
poultry processing sector, such cases had been referred to the Australian Tax
Ms Huang confirmed that, in her experience, many 417 visa workers had no
idea about the taxation arrangements in Australia, or indeed that they were not
I can only tell you my experience. I applied for the 417 back
in 2010. I just applied online. The working conditions or working regulations
are all on the Immigration website, which is all English. The backpackers
especially have no idea whatsoever. In terms of talking about a tax issue, they
probably come over here and just want to travel a little bit, earn some extra
money. So they have no idea. Her friend told her, 'Hey, you can find a job this
way,' so she just dialled the number and texted the labour-hire company saying,
'Hey, I need a job.' Even a worker said to me: 'It is the end of the financial
year. How am I going to do the tax?' So they have no idea they are not paying
The head contractor from the labour hire company organised the accommodation,
typically a two or three bedroom house, with two or three backpackers sleeping
in each room. Ms Yao stated that all the backpackers in her house paid $105 a
week in rent each.
Empirical fieldwork research conducted in 2013 and 2014 across Victoria (Bendigo,
Maffra, and Mildura), Tasmania and the Northern Territory by Dr Elsa Underhill
and Professor Malcolm Rimmer, from Deakin University and La Trobe University
respectively, found that WHM visa workers experience significant vulnerability
in the harvesting sector in Australia and below award average hourly rates of pay.
The level of vulnerability was intensified when WHM visa workers were employed
by a labour hire company rather than employed directly by the grower.
Dr Underhill and Professor Rimmer found WHM visa workers experienced 'very
low rates of pay when paid piece rates' and that this situation was 'exacerbated
by the Horticultural Award clause on piece rates which refers to 'the average
competent worker'. As a consequence of this clause, it was found that growers
and contractors are able to pay piece rates that do not allow the average
competent worker to earn an amount which approximates that set out in the
award. Dr Underhill and Professor Rimmer therefore recommended:
Replicating the British system of providing a specified
floor, equal to the minimum hourly rate of pay, would overcome the intense
exploitation experienced by piece workers in horticulture.
Furthermore, the pressures imposed on WHM visa workers by the piece rate
system led to 'a level of work intensification' that enhanced the risk of
workplace injury and led to a 'low level but constant exposure to injury'. At
the same time, the research found visa workers did 'not receive adequate
information and training about the health and safety risks which they are
likely to encounter at work'.
The role of industry associations
in combatting rogue labour hire companies
Ms Mogg suggested that dealing with a growing number of rogue labour
hire contractors required collaboration between industry and the FWO in order
to ensure that the regulation of the contract labour hire industry is
adequately enforced (this is covered in greater depth in chapter 9). However,
Ms Mogg also recognised the need for industry to work with employers in terms
of advising employers about their compliance obligations, and advising
employers 'not to deal with dodgy operators'.
In this regard, Growcom had provided advice and support to employers in the
Queensland horticulture sector over a number of years. This included workplace
relations advice, specific resources to assist employers to meet their
compliance obligations, regular training and seminars, and information on workforce
development and planning.
The South Australian Wine Industry Association played a similar role in
running education and training programs for employers so that they understand
their obligations in terms of workplace and migration law.
Exploitation of Working Holiday Maker visa workers by labour hire companies
in the meat processing industry
Evidence to the inquiry from the FWO, the Australasian Meat Industry
Employees' Union (AMIEU), and several 417 visa workers themselves, detailed the
extensive exploitation of 417 visa workers at meat processing plants in
Queensland, NSW and South Australia (SA). In this regard, the committee notes
the Four Corners program in May 2015 revealed the exploitation of 417
visa workers at a Baiada poultry processing plant in SA.
The evidence outlined a litany of activities, many of them illegal,
including below-award wages, non-payment of entitlements under the law,
coercion and threats against union members, substandard and illegal living
conditions in accommodation provided by labour hire contractors, health and
safety conditions, as well as the labour hire business model.
At the public hearing in Brisbane, Mr Warren Earle, a Branch Organiser
for the AMIEU (Queensland), described what had occurred at the Primo Smallgoods
(Hans Continental Smallgoods) site at Wacol near Ipswich. The site opened in
late 2012 and is the largest smallgoods plant in Australia.
Primo Smallgoods dealt with a labour hire firm called B&E Poultry Holdings
that was itself a parent company to subsidiary companies. Mr Earle stated that
at the time, the Korean workers on 417 visas got pay slips from two different
companies, Best Link Management and Bayer Management. The pay slips showed the
Korean visa workers were getting between $1 and $3.50 less than the award rate
and 'were not getting paid any overtime, shift penalties or weekend penalties'.
During this time, approximately 140 Korean 417 visa workers joined the
AMIEU. The AMIEU followed up on the underpayments and secured a six figure sum
in back pay plus superannuation for the Korean workers.
However, the labour hire company was monitoring the activities of the
Korean visa workers and a representative also sent text messages to the Korean
workers threatening them that they would lose their jobs if they spoke to the
union. Over the next 6 to 12 months, the Korean workers were replaced with
Taiwanese workers on 417 visas. The AMIEU has been informed that the Taiwanese
visa workers have also been threatened that they will lose their jobs if they
approach the union.
It also appears that the subsidiary labour hire firms are circumventing
the rules that prevent a 417 visa worker from working for more than six months
for any one employer by simply transferring employees from the books of one
labour hire company to the other one.
International labour hire networks
At the public hearing in Sydney, the committee heard from Mr Grant
Courtney, Branch Secretary of the AMIEU (Newcastle and Northern NSW Branch), Mr
Hoi Ian Tam, International Liaison Officer with the AMIEU, and three 417 visa
workers, Miss Chiung-Yun Chang, Miss Chi Ying Kwan, and Mr Chun Yat Wong.
Mr Wong recounted that in Hong Kong, he and Miss Kwan had seen an
advertisement on Facebook for work at Baiada in Australia. Mr
Wong and Ms Kwan were subsequently contracted by the labour hire company, NTD
Poultry Pty Ltd (NTD Poultry), to work at the Baiada chicken processing
plant in Beresfield, northwest of Newcastle. NTD Poultry is part of the
multi-layered web of labour contracting firms that supplied workers to the
Baiada processing plants in NSW (see Figure 7.1 later in this chapter).
The AMIEU also tabled evidence documenting the role played by
international labour hire agencies in the exploitation of 417 visa workers. For
example, agencies in Taiwan such as Interisland and OZGOGO will help labour
hire companies in Australia such as AWX Pty Ltd (AWX) and Scottwell
International to recruit workers.
Mr Tam stated that agencies in Taiwan charges workers in Taiwan up to
$3000 to organise a job in the meatworks in Australia. However, the workers
often report they have to wait a long time to get a job in Australia and still
have to pay rent to the Australian labour hire company:
Basically, lots of agencies from Taiwan help the labour hire
company in Australia—such as AWX and Scottwell International in Australia—to
recruit workers. This agency from Taiwan requests workers in Taiwan to pay up
to $3000 Australian in order to get a job in the Australian meat industry. They
arrange all the things for the workers like accommodation, induction and other
things. But most of the workers say they cannot get a job and they need to wait
a long time, probably two to three months, until they get a chance to be
inducted. In this time, the workers also need to pay rent to the labour hire
agency. So before they start work, they have already paid A$6000 for this
Miss Chang confirmed that even after paying $3000 in Taiwan and then
having to wait before they can begin induction training, many of her friends
also had to pay an agent called Tim another $1000 to $2000 to work in a meat
factory. Mr Tam noted that Tim works for AWX, so the union believed that AWX also
collects that money.
The AMIEU provided further documents to support the evidence given by
the witnesses. Tabled document 12 is a Chinese contract issued in Taiwan by a
Taiwanese labour hire company with links to Scottwell International. It offers
two job vacancies, one at an Adelaide beef factory and the other at a Sydney
beef factory. The fees are in in New Taiwanese Dollars (NTD). The contract fee
and overseas fee total NTD $65 000, or just over AUD$2800. In addition,
there is a jobs bond of AUD$600. The pay rates are $18.10 to $21.70, with
overtime paid at the same rates. The period of work is one year, and
accommodation is $80 to $100 a week with a two week bond.
Tabled document 9 included three Chinese language documents. The first
offered a seminar about working holidays by Australian labour hire company AWX
and Taiwanese labour hire company Interisland. The second offered a package of
meatworks jobs arranged Interisland and AWX for 417 visa workers. The package
required workers to pay NTD $15 000 and AUD$150 a week for rent, AUD$30
for food and AUD$150 for transportation. The third, by Taiwanese company OZGOGO
with links to Australian labour hire company Scottwell International, advertised
jobs for $18 an hour in a meatworks in Murray Bridge, SA.
Illegal training wages
The committee heard evidence that once the visa workers had arrived in
Australia, the labour hire company exploited them over the conduct and payment
of training prior to their being granted employment in the meat industry.
As background, Mr Courtney described the long-standing training system
in the meat industry:
We have a very good training system called the Meat Industry
Training Advisory Council [MINTRAC], which the union and the employer
association established about 25 years ago. Most of the people who work in our
industry go through a certificate II in MINTRAC for that purpose, to give them
the food safety competencies and also the standard occupational health and
safety requirements in the position.
A certificate II must be designed and accredited to adhere to the
specifications of the Australian Qualifications Framework and any government
accreditation standards for vocational education and training. The purpose of a
certificate II is to qualify individuals to undertake mainly routine work and
as a pathway to further learning.
By contrast, Mr Courtney said that what the 417 visa workers were put
through had 'nothing to do with training'.
Miss Chang described the four week 'training' organised by the labour hire
company, AWX. A series of standard AWX forms tabled by the AMIEU laid out the
evidence on the extent of the deception involved in the AWX training program.
One week prior to commencing training, Miss Chang had to pay a $300
up-front fee to AWX. The AWX timesheet states that the worker will be paid for
one day's work each week, which will be a total of 9.5 hours at $21.08 an hour
for a total of $200.26 per week before tax. There is also a clause in the
Your wage for the 4th week will be held and paid
with your first week's salary after commencing employment on an AWX site.
But the training documents only wore the appearance of legality. In
reality, the visa workers worked 50 to 60 hours a week at A. & A. Reid
Enterprise Pty Ltd, trading as Reid Meats in Western Sydney, not the 9.5 hours
on the timesheet. Miss Chang stated that the visa workers started their
training shift at 6.00am and finished at 3.00pm, but often worked overtime
until 4.00pm or 5.00pm. Likewise on the evening shift, they started at 3.00pm
and would finish at 1.00am or 2.00am, a ten or eleven hour shift.
To add insult to injury, however, once the trainee commenced employment,
the training wages were deducted from the employee's wages in eight weekly
instalments of $100:
After your training is complete and your employment commences
with AWZ; $100 per week will be deducted from your wages for a total of 8 weeks
to cover the remaining training costs.
Mr Tam explained that, in effect, the visa workers did four weeks of
unpaid work of up 60 hours per week:
For three to five weeks. 'You will still get paid $200 a week
as a living allowance.' It is for their rent, but the pay slip shows the wrong
working hours. Basically, they worked for 50 or 60 hours per week, but the pay
slip only shows nine hours per week and it makes it look legal. Also, after the
workers, like Amy, get a job start at an abattoir, this $200 per week will be
deducted back by AWX, so actually it is no pay.
Below award wage rates and long
The wages the 417 visa workers at the Baiada site in Beresfield were
getting were well below award rates. Mr Wong stated that the hourly rate was
'close to $12' an hour, with a maximum of $15 an hour over the past half-year.
Mr Wong said the rate cannot be given with certainty because 'it is counted by
kilogram; it is not by hours'.
Mr Tam said the workers have been unable to get the information that
would allow them to work out their wage calculations:
Every time when the workers want to ask how much they can pay
and how that amount is calculated, the contractor will explain that we will
calculate as a team how much production by kilogram as a formula, and formulate
that amount of money, which is like 0.32 per cent of the whole production, for
which you can get this money. Actually they have no idea how much they produce
and how to calculate the actual amount, and they cannot get the answer.
Miss Kwan also explained that although the same formula was used for male
and female employees, the women were paid less than the men because they were
doing different work:
Boys can get more than a woman. Maybe $0.50 to $1.
Because the girls are only packing or labouring and the boys
will move the meat or do some harder work.
The 417 visa workers at the Baiada Beresfield site worked long hours.
The minimum hours worked were 12 hours every day, with an overnight
Saturday/Sunday shift of up to 18 hours:
The minimum was 12 hours every day.
The longest was on Saturday until Sunday. The hours were very
long. One time we started at 5 pm on Saturday and worked until 11 am on Sunday.
This is a long day.
Furthermore, visa workers did not always get designated breaks. Rather,
meal breaks were dependent on the urgency of the orders to be completed, with a
toilet break being the only respite:
It is urgent to finish. We will maybe work seven hours with
no break and when you finish the job you will be off duty. But there was no
Because I am late shift staff we must be finished all orders
before we can go home. If they were urgent there may be no break for us—only
In addition to the long hours, the entire shift was spent in a
processing plant where the average temperature was between three to five
degrees celsius with short periods of minus 20 degrees celsius in the blast
Mr Wong raised concerns about workplace health and safety and the
pressures placed on staff to return to work despite suffering work-related
I hurt my neck from the working hours, but they just give me
two days off to rest. After that my boss needed me to go back to work, because
they said there was not enough manpower. My section has only two guys to handle
it. When I had a break no-one covered my job. So there was a request that I go
back to work.
Ms Chang stated that her training contact had a rate of $21 an hour.
However, when she started her employment at the Teys abattoir in Wagga Wagga,
AWX told her the salary started at $16 to $17 an hour:
They told me there was an apprenticeship in Wagga Wagga, but
the salary starts at $16 or $17 per hour. In our training course contract we
were already on $21 per hour. If you do not want that and you cannot accept
that, you are just waiting a long time. We do not have a choice. You just start
at $16 or $17.
Mr Courtney clarified that $16.86 per hour is the entry level rate under
the award, but that 'no-one in the meat industry generally gets paid the
entry-level rate if they have skills'.
'Voluntary overtime' agreements
The AMIEU also tabled a standard AWX form that sets out a 'voluntary
overtime' agreement between AWX and an employee. Attached to the document was a
wage slip for the first week of February 2015. The wage slip showed a worker at
George Weston Foods Ltd (trading as Don KRC) in Castlemaine Victoria worked 38
hours at $16.86 per hour and worked an additional 10.25 hours (over 38 hours)
at $16.86 per hour.
Mr Courtney stated that paying $16.86 per hour for overtime hours clearly
breached the Fair Work Act 2009 (FW Act) and the award.
Mr Courtney expressed disappointment that AWX 'were conducting
themselves the way some of these other sham contracting agencies were',
particularly with regard to the four weeks unpaid training at Reid Meats and
the overtime hours paid at normal rates. Mr Courtney was unsure of AWX's
motivation and whether it was 'a drive to the bottom' or a necessity to compete
with sham contractors and illegal phoenix operators in the labour hire sphere.
Nevertheless, Mr Courtney noted that AWX was the largest supplier of
labour to Teys Cargill Australia and that 'large companies like Teys are
engaging labour indirectly for the purpose of undermining enterprise
agreements. We can have the best agreement in the world, but it is not worth
the paper it is written on'.
Fake timesheets and no payslips
Mr Wong also provided the committee with evidence of fake timesheets
produced by the labour hire company NTD Poultry to satisfy new requirements
from Baiada. Sheet 2 of Tabled Document 7 shows the signed Time and Attendance
Record for the tray pack night shift on 3 June 2015. According to the Time and
Attendance Record, the workers started at 5.00pm and finished at either 10.00pm
or 4.00am, a maximum shift of 11 hours. However, NTD Poultry also kept an
actual record of their workers hours in order to pay them. Sheet 1 of Tabled
Document 7 is the true record. It shows worker 56 (Mr Wong) actually worked
from 5.00pm until 8.00am, a shift of 15 hours:
The reason I needed to take this photo is it was very
difficult—very important for the company—and now you can see. No. 1 is the true
hours timetable. They just follow this one. How many hours they pay their
staff. So this one is the real one.
This No. 2 document they started 8 June, because they got the
order from Baiada that they needed to do this timetable for Baiada. The first
time, I asked what the reason for the paperwork was, but they did not answer
me. They needed our signature first, and then after you can see the start time
and the finish time. The finish time is empty, and it is clean when we sign it.
We sign it before. So that means that, after we sign it, they can write
whatever they want. Also, after three days I asked, 'Why do we need to sign
this before?' I thought maybe there was a law or something—we make mistakes; we
get trouble. They answered me: 'This one is for Baiada. Also, does not write
down for more than 12 hours for this paper.' So this is the fake hours.
Miss Kwan and Mr Wong also explained that they never got a payslip from
NTD Poultry, just an envelope with cash inside. AMIEU Tabled Document 8 shows
that on the back of the envelope were the employee number, the date, a kilogram
figure, and a total pay amount.
Local workers unable to secure
There were marked differences not only in the pay that 417 visa workers
received compared to local workers, but also in the hours that they worked. Mr
Tam explained that many of the local workers were not able to get direct
employment and instead had to get work through a labour hire company. However,
the local workers paid at about $27 an hour could only get 16 to 20 hours work
a week when they actually wanted full-time work of 38 hours a week. By
contrast, the 417 visa workers had to work 60 or even 80 or 90 hours a week
when they only wanted 45 hours work a week. The 417 visa workers are paid only
$12 to $15 an hour, whereas the local workers are paid correctly.
For example, page four of Tabled Document 6 shows three 417 visa workers
at the Baiada plant employed by NTD Poultry worked 93 hours in the week at
$12.50 an hour when they were expecting 40 hours a week. By contrast, page one
shows four local workers paid at $26.46 an hour only getting 21 to 24 hours a
week when they were expecting 38 to 40 hours a week.
The committee was keen to understand the role that supermarkets play in
this system. Mr Courtney explained that the minimum wage in the meat processing
sector was low compared to other industries, with the average rate for a
labourer in the industry of between $32 000 and $37 000 a year. And yet,
employers such as Baiada have repeatedly told the union that the supermarket
chains dominate the market and can therefore determine the price and they are
driving down prices even further.
Substandard accommodation provided
by labour hire contractors
Mr Ian McLauchlan, a Branch Organiser for the AMIEU (Queensland),
described the atrocious living conditions of 417 visa workers employed at
Wallangarra Meats on the NSW-Queensland border. At the former Wallangarra
hotel, now backpacker accommodation, the showers did not work and there were up
to four 417 visa workers in small rooms. Elsewhere in Wallangarra, ten 417 visa
workers paid the labour hire company $120 each a week to live in an old home.
They were not allowed to use the heating in winter, the bedding was on the
floor, there was no kitchen table, and they had to set up a rice cooker on
The 417 visa workers in NSW experienced similar conditions in their
accommodation. Miss Chang also had to pay $120 rent per week for a room she
shared with two other people. Another flatmate had to sleep in the living room.
The property owner dealt with AWX.
The AMIEU tabled photographs of the crowded slum-like conditions of visa worker
accommodation provided by labour hire contractors.
Picture 7.1: Accommodation for 417 visa holders employed in
Source: Australasian Meat
Industry Employees' Union, Tabled Document 4, Sydney, 26 June 2015.
Evidence gathered by the FWO during their investigation of Baiada supported
the accounts provided by 417 workers and the unions regarding the benefits that
labour hire contractors derived from exploiting temporary visa workers over
their accommodation. The FWO calculated that the potential annual rental income
accruing to a labour hire contractor from temporary visa worker accommodation
is substantial. For example, one overcrowded Beresfield property was found to
have sleeping accommodation for 21 visa workers employed at the Beresfield
plant. The FWO observed:
Based on 20 people paying $100 per week, the potential rental
income for this property is over $100,000 per year.
The FWO also documented another case of overcrowded accommodation that
benefitted the labour hire contractor at the Baiada Beresfield site:
Thirty workers engaged within the Pham Poultry supply chain
were housed in a six bedroom house with two bathrooms, with the supervisor
having one bedroom for her exclusive use. Each worker was required to pay $100
per week, deducted from their wages.
In addition, the FWO found there were no written agreements in relation
to the deductions for rent from the wages of the visa workers. The FWO noted
that deductions for rent are not permitted under the FW Act if the requirement
is deemed unreasonable:
Subsection 325(1) of the FW Act provides that 'an employer
must not directly or indirectly require an employee to spend any part of an
amount payable to the employee in relation to the performance of work if the
requirement is unreasonable in the circumstances'.
Subsection 326(1) provides that a term of a contract
permitting a deduction has no effect to the extent that the deduction is 'directly
or indirectly for the benefit of the employer' and 'unreasonable in the
The AMIEU also tabled a document they said indicated the manipulation of
the visa system by labour hire agencies both in overseas countries and within
Australia. The alleged scam involved charging 417 visa workers a large fee to
access a protection visa application in order for the worker to gain another 18
months' work in a meatworks in Australia, all the while knowing that the
application would eventually fail:
...one of the main concerns that we have at the moment with the
visa system is the manipulation of the visas across the refugee visa, the 417
visa and, in turn, the bridging visa and student visas. Clearly the ability for
foreign visitors to apply for a protection visa when they arrive in Australia
is a bit of a scam at the moment, the way I see it, because they are being
advised by certain people within Australia and also within their home countries
on how to access continuous work in Australia unlawfully. One of our main
concerns with that is that holders of 417 visas in particular have to pay, and
are being requested to pay, up to $7000 to buy another right to stay in
Australia, and that is about applying for a protection visa or refugee visa. Of
course, once they apply for that visa, they are then given a window of up to 18
months for that visa to be accepted, knowing that that visa will not be
accepted. We have had a range of members that have contacted us—in particular
from the Baiada Beresfield site—that have highlighted what they have paid, and
in some cases it is up to $7000. In turn, if they want to make an application
for a protection visa, it is a $35 application. So they are clearly being
exploited (1) by the advisers in Australia that are providing this information
and (2) by certain labour agents in their home countries milking the system and
making sure they take as much money off these workers as they can.
Approach taken by the AMIEU to
The committee questioned the AMIEU over the approach it has taken to
resolving complaints from workers and about the relationship that it has with
employers in the industry.
Mr Courtney was very clear that the AMIEU looked to work cooperatively
with employers and certainly would not 'name and shame' an employer, firstly,
because the union had a good agreement with the employer and, secondly, because
damage to a company's reputation would be counter-productive in terms of the
ongoing employment and welfare of the workers that they represent. Mr Courtney
stated the issue was not the agreement that the union had negotiated with the
company, but the inequitable treatment of the contracted labour at Baiada:
But, in the discussions that we have had with all of the
employers, particularly Baiada, where we represent over 1000 people in New
South Wales, we have been very up-front with them. We provided the company with
the evidence that we have provided to the Fair Work Ombudsman. We have been
very open with them. We have not tried to hoodwink them. We have not attacked
them publicly. What we have done is expressed our concerns about the
contracting companies they are engaging, especially when we have the best
enterprise agreement rate and the highest union rates in Australia at the
Beresfield site. We can have the highest rates, at $26.50 entry level, but then
you have cases like Skye's and Gypsy's, where they are getting paid $11.50 and
$12.50 on the same site. It is the inequity issue that we have major concerns
We have been pressing that point with the employers directly,
because the last thing we want to do is put fear into the community about
buying the product. We have the welfare of our 600-strong workforce to think
of, as well as the good name of the company, we believe—because we have a good
agreement with the company. The problem that we have is those contracted
service arrangements that we are not privy to, and the only time that we can
express an opinion with the company is when we provide them with the
information. They know what the issues are. We do not just pull them out of the
sky. There are 700 at one particular site at the moment that I say are all
being grossly underpaid and treated inequitably.
In terms of the scale of exploitation, since 2012 Mr Courtney noted that
the AMIEU estimated 417 visa workers were owed $1.26 million in underpayments.
With one labour hire company, Pham Poultry, the AMIEU provided evidence to the FWO
that 32 workers were owed $434 000.
Since 2011, Mr Courtney indicated that the AMIEU notified the FWO about
visa worker exploitation on most occasions (about 70 per cent). The AMIEU
pursued the rest of the cases directly through the courts.
However, Mr Courtney also set out two major difficulties in pursuing
court proceedings. First, visa workers only have a limited time in Australia,
and second, companies liquidate as soon as they become aware of any proceedings
Because of the time constraints in relation to pursuing legal
proceedings and dealing with 417 backpackers—most of the claims are from
backpackers—by the time the matters get before the courts the person is
generally back in their home country. To provide evidence in chief is very
difficult when you are 3,000 or 4,000 kilometres away. We have actually pursued
our own matters as well. The process that we usually follow is: we notify the
circuit court—that is, the application—and then we get in the queue. It is
usually nine months before the matter is mediated. As soon as we notify the
circuit court, the company in question makes an application to liquidate.
The issue of companies being repeatedly liquidated, and then reappearing
as different companies, has been documented by both the AMIEU and the FWO.
While this phenomenon is covered in greater depth in subsequent sections, the
question of how to regulate illegal phoenix activity is considered in chapter 9.
The Fair Work Ombudsman investigation into the labour hire arrangements of
the Baiada Group
Following media reports in October 2013 alleging visa worker
exploitation at the Baiada Beresfield plant in NSW, the FWO began an
investigation into the labour procurement arrangements of Baiada at its three
NSW sites, Beresfield, Hanwood and Tamworth. The FWO inquiry began in November
2013 and reported in June 2015.
The FWO investigation and report are covered at length here because the
findings corroborate the evidence the committee received from both the AMIEU and
417 visa workers.
The FWO report was scathing of the failure by Baiada to fully cooperate
with the inquiry, noting that:
the inquiry encountered a failure by Baiada to provide any
significant or meaningful documentation as to the nature and terms of its
contracting arrangements with businesses involved in sourcing its labour; and
Baiada denied Fair Work Inspectors access to its three sites in
NSW which would have provided the inquiry with an opportunity to observe work
practices as well as talk to workers about work conditions, policies and
Baiada's contractor operating model
The FWO report noted that the Baiada Group (Baiada) and Ingham
Enterprises dominated the poultry processing industry in Australia, supplying
70 per cent of the national poultry meat market. Both companies were vertically
integrated entities that owned or controlled all aspects of the production
chain. Baiada included both Baiada Poultry Pty Ltd and Bartter Enterprises Pty
Ltd (the latter purchased in 2009).
The FWO found Baiada directly employed 2200 employees.
The rest of the processing labour force was procured through a network of
contractors. The FWO found Baiada had agreements to source labour from six
principal contractors: B & E Poultry Holdings Pty Ltd; Mushland Pty Ltd; JL
Poultry Pty Ltd; VNJ Foods Pty Ltd; Evergreenlee Pty Ltd; and Pham Poultry
(AUS) Pty Ltd. Furthermore, 'there was no documentation establishing or
governing' the arrangements between Baiada and the contractors and 'all of
these agreements were verbal agreements'.
Beyond the principal contractors, the FWO uncovered a web of subcontractors
that in turn engaged further subcontractors. The FWO found the following:
the principals contracted to at least seven entities acting as
second tier contractors;
the second tier contractors, often contracted down a further two
or three tiers;
the principal and second tier contractors were not generally
engaged in the direct sourcing of labour; and
the operating model relied upon verbal agreements and operated on
high levels of trust.
The web of contractors and subcontractors led the FWO to conclude that
Baiada had adopted an operating model which sought 'to transfer costs and risk
associated with the engagement of labour to an extensive supply chain of
contractors responsible for sourcing and providing labour'.
Figure 7.1 (below) shows the labour procurement arrangements identified
by the FWO during its investigation of the Baiada Beresfield site.
Figure 7.1: The labour procurement arrangements at the
Baiada Beresfield site as at 31 October 2013.
Source: Fair Work Ombudsman, A
report on the Fair Work Ombudsman's Inquiry into the labour procurement
arrangements of the Baiada Group in New South Wales, Commonwealth of
Australia, June 2015, p. 19.
The FWO identified four principal contractors at the Beresfield site.
One of these contractors, B&E Poultry Holdings (B & E), operated its
own processing factories in Ormeau in Queensland and Blacktown in NSW. B &
E had already been the subject of FWO action:
In the last three years 14 requests for assistance have been
received from direct employees of B & E working at the Ormeau site resulting
in recoveries of over $100 000 in underpayments. On 1 August 2014 B & E
entered into a three year Enforceable Undertaking with the FWO in respect of
admitted contraventions by B & E in relation to its direct employees. The
admitted contraventions concerned: underpayment of base hourly rates,
underpayment of casual loadings, overtime rates, weekend penalties and shift
There were substantial differences in the payments made from Baiada to
the principal contractors and those paid by the contractors to the employees.
For example, in October 2013, Baiada paid Mushland Pty Ltd (Mushland) $255 415 and
Mushland paid $52 460 in wages to 18 employees during the same period. This
gave Mushland a margin of $202 954. Mushland was deregistered on 16 July
2014 with no back payment to the underpaid workers.
Similarly, Baiada paid Pham Poultry (AUS) Pty Ltd (Pham Poultry) $1 078 155
for services provided at the Beresfield site during October 2013. Yet the FWO
found substantial underpayment of the visa workers at the bottom of the supply
The Pham Poultry arm of the labour supply chain involved four
companies at a tier below the principal, these four companies subsequently
contracted a further tier to a company called FoxInt Pty Ltd (FoxInt). The
director, Quoc Hung Pham, was also a director of the principal Pham Poultry.
Although Pham Poultry directly engaged some workers who were
supervisors at the site, all process workers were engaged by FoxInt. Workers
were paid between $11.50 and $13.50 per hour for shifts of up to 19 hours and
were not paid any leave entitlements or provided payslips. The wages paid to
the process workers at the bottom of this supply chain did not meet the
required minimum entitlements.
Almost all of the subcontracting companies were deregistered or went
into voluntary liquidation upon investigation by the FWO. Following Pham Poultry's
deregistration, NTD Poultry Pty Ltd (NTD Poultry) replaced Pham Poultry as the
principal contractor. However, the same labour supply chain (with the same
uncontactable director) remained in place:
The labour supply chain operated by NTD Poultry contained the
same entities as those in the Pham Poultry labour supply chain. That is, a
three tier supply model remained in place and the final contractor of labour
FoxInt Pty Ltd, remained, whose Director, Mr Quoc Hung Pham, had been the
Director of Pham Poultry and who could not be located by Fair Work Inspectors.
Figure 7.1: The NTD Poultry supply chain as at January
Source: Fair Work Ombudsman, A
report on the Fair Work Ombudsman's Inquiry into the labour procurement
arrangements of the Baiada Group in New South Wales, Commonwealth of
Australia, June 2015, p. 22.
Even after NTD Poultry replaced Pham Poultry, the FWO still received
reports of the continuing underpayment of workers getting $11.50 to $12.50 an
hour. In this regard, the FWO made the point that when a contractor or
subcontractor ceased to operate, it was 'very quickly replaced with new 'price
takers', resulting in suppliers of labour being forced into accepting market
prices with no power to negotiate a higher price'.
Although the FWO endeavoured to investigate NTD Poultry further, it
found that 'workers were reluctant to be witnesses in any ongoing investigation'
and no documentary evidence had been recorded or maintained by the employing
(The committee therefore notes the evidence in the preceding section from Miss
Chi Ying Kwan and Mr Chun Yat Wong who were both employed by NTD Poultry).
The FWO was unable to locate the director of Pham Poultry and FoxInt Pty
Ltd, Mr Quoc Hung Pham. The FWO noted that 'the second director of Pham
Poultry, Mr Binh Hai Nguyen, made voluntary payments of $20 250 to 10 workers
to partially rectify the underpayment of entitlements'.
In terms of the labour hire contractors supplying workers to Baiada, the
employees not being paid their lawful entitlements;
a large amount of work performed 'off the books';
contractors unwilling to engage with Fair Work inspectors;
production of inadequate, inaccurate and/or fabricated records to
a number of entities throughout extensive supply chain networks
did not engage any workers or have any direct involvement in work undertaken
within Baiada's NSW processing plants or the sourcing or management of labour
undertaking the work;
a large number of the entities identified in the supply chains
ceased trading; at times ceasing to exist the day before scheduled meetings
with the FWO;
invoices from contractors that were either no longer registered
as businesses or claimed not to be involved in the industry; and
workers too scared to talk.
Related to the above, the FWO uncovered a raft of other issues and
possible contraventions including entities failing to update their details with
ASIC, entities operating when deregistered, sham contracting, subcontracted
entities operating as clothing manufacturers with no apparent connection to the
poultry processing industry, a principal contractor that did not engage any
employees directly, and another principal contractor that only directly engaged
one employee to perform processing work.
The FWO also found that Baiada paid the 'principal contractors by the
kilogram of poultry processed rather than by hours worked or the times
processing work was performed'. That is, Baiada took no account of whether the
work was undertaken on weekends, public holidays or during a night shift.
The FWO noted that from 1 July 2014, the Poultry Processing Award 2010
[MA000074] (Modern Award) applied in full across all three Baiada NSW sites for
workers engaged through contractors undertaking poultry processing work. The
FWO also noted the provisions related to piece rates:
Although contractors within the supply chain reported paying
piece rates, the industrial instruments that covered the work undertaken did
not provide for payment of piece rates. In circumstances where piece rates are
provided for in a Modern Award or enterprise agreement, there remains a
requirement to ensure workers receive wages that equate to award minimums.
In sum, the inquiry found:
non-compliance with a range of Commonwealth workplace laws;
very poor or no governance arrangements relating to the various
labour supply chains; and
exploitation of a labour pool that is comprised predominantly of
overseas workers in Australia on 417 working holiday visas, involving:
extremely long hours of work;
high rents for overcrowded and unsafe worker accommodation;
misclassification of employees as contractors.
The FWO recommended a series of actions for Baiada to take in order to
address the issues arising from the investigation. These actions are covered in
the next section.
Baiada's response and the Proactive
Compliance Deed between the Fair Work Ombudsman and Baiada
Before examining the response from Baiada, the committee notes that the
FWO report emphasised the point that Baiada was the chief beneficiary of the
labour contractor model that it used to source labour and that Baiada had the
power to improve its internal processes and rectify the non-compliance with
The Inquiry also identified that this operating model
transfers the cost and risk associated with the engagement of labour from the
Baiada Group to labour supply chains of contractors. When contractors are asked
to demonstrate to the Baiada Group that they are complying with minimum
entitlements, they provide very minimal evidence, which appears to be accepted.
It is important to note the actual work and subsequent
non-compliance with Commonwealth workplace laws is taking place on premises
owned and operated by the Baiada Group. Baiada Group is therefore the chief beneficiary
of work carried out by this labour force. The Baiada Group has the ability to
take steps to ensure that workplace laws are complied with on their sites.
In September 2015, Baiada advised the committee that it had instituted 'some
of the most stringent contactor-oversight measures in the industry'. The
following specific measures had been implemented since May 2015:
Baiada terminated agreements with three contractors that could
not demonstrate they had sufficient measures in place to ensure compliance with
workplace laws. The termination affected 600 workers (50 per cent of the
contract processing workforce). Those workers agreed to move to an agency
employment provider and nearly all are still working at Baiada sites;
Baiada prohibited labour subcontracting such that only entities
in a contractual relationship with Baiada may engage workers at Baiada sites.
Baiada's contractors were prohibited from further subcontracting unless they
receive express written permission to do so from Baiada's Managing Director;
Baiada introduced electronic time keeping for contractors'
process workers at Baiada processing sites;
Baiada required all remaining contractors to appoint Baiada to
deposit wages directly into contractors' workers' bank accounts. Baiada also pays
all workers' superannuation directly into their superannuation accounts and
ensures all pay-as-you-earn (PAYE) tax is paid directly to the ATO;
Baiada entered into new contracts requiring contractors to
improve record keeping, increase transparency, provide detailed reporting,
obtain certificates of compliance from external accounting professionals and
allow third parties to conduct audits of their books;
Baiada introduced multilingual (including Mandarin, Vietnamese
and Korean) workplace policies, procedures and information, including
complaints processes, at processing sites. In addition, Baiada established an
onsite translation service and now provides newly inducted workers with the FWO
work rights pamphlets when they commence work at a site;
Baiada now confirms that contractors' process workers have the
correct visa status before they are able to commence work at Baiada processing
sites. Once the Visa Entitlement Verification Online (VEVO) checks are
completed, the workers are issued with a Photographic ID Card showing their
name, employer and work rights status. Baiada recently conducted additional
checks of the contractors' workforce to confirm compliance with visa
restrictions relating to hours of work or length of engagement and will conduct
another such check before the end of 2015;
Baiada now requires all contractors to provide Baiada with bi-annual
third party compliance audits of their workers' payroll records; and
Baiada took advice from specialist workplace consultants, and corporate
law firm Minter Ellison.
Baiada now has seven contractors at its eight processing plants covered
by ten separate agreements:
Adelaide: J & T Trade Pty Ltd;
Beresfield: J & T Trade Pty Ltd; and VNJ Holdings Pty Limited;
Ipswich: PHV Poultry Pty Limited;
Laverton: GGPB Power Pty Ltd;
Hanwood: GGPB Power Pty Ltd;
Tamworth: GGPB Power Pty Ltd; and HP Food Pty Limited;
Osborne Park: Calacash Inwa Enterprises Pty Limited; and
Mareeba: Springtime Poultry Pty Limited.
Mr Grant Onley, Human Resources Manager at Baiada, noted that Baiada charged
the contracting agencies a fee for service for the new payroll services whereby
Baiada deposits wages directly into contractors' workers' bank accounts.
However, Mr Onley stated that 'Baiada is actually losing money on that, but it
is part of our commitment to ensure that workers are paid right. That is part
of our business model going forward'.
Indeed, Baiada estimated 'the new payroll services arrangements cost the
business in the vicinity of $500 000 per annum' and that this did 'not
include the other non-payroll oversight measures we have introduced at our
Mr Onley noted that Baiada had also invested in other parts of the
business to ensure ethical and lawful business practices were occurring
throughout the organisation:
We have invested heavily in biometrics. Rather than an ID
card that has a photo on it, we are using fingerprint biometric technology in
some of our processing plants. We have certainly engaged consultants to do the
review of the audits. The management time that we have thrown into this is
quite considerable. We have some training requirements with regard to
management and supervisor training going forward that we have committed to.
On 23 October 2015, Baiada signed a three year Proactive Compliance Deed
(Deed) with the FWO. In the Deed, Baiada acknowledged its responsibilities as a
business to all workers at its sites:
Baiada believes it has a moral and ethical responsibility to
require standards of conduct from all entities and individuals involved in the
conduct of its enterprise, that:
with the law in relation to all workers at all of its sites, and
Australian community and social expectations, to provide equal, fair and safe
work opportunities for all workers at all of its sites.
The Deed also stated that Baiada 'has and will continue to implement
fundamental, permanent and sustainable changes to its enterprise' to ensure
compliance with the FW Act.
As part of these commitments, Baiada agreed to ensure:
a dedicated hotline is established for employees to call and make
a complaint if they believe they have been underpaid;
workers carry photo identification cards which record the name of
their direct employer;
an electronic time-keeping system that records all working hours
of each employee;
employee wages can be verified by an independent third party, and
are preferably paid via electronic funds transfer;
contractors must be independently audited to ensure their
compliance with workplace laws, with audit results to be provided to the FWO
the company's own compliance with the FW Act is independently
assessed regularly over the next three years;
a workplace relations training program is put in place to educate
employees about their workplace rights, including language-specific induction
qualified human resources staff are on-site at each processing
plant to respond to inquiries, complaints and reports of potential
contact details of all labour-supply contractors are provided to
the FWO, including copies of passports of company directors;
Fair Work inspectors have access to any worksites and any
documents at any time; and
arrangements with contractors are formalised in written contracts
requiring contractors to comply with workplace relations laws.
Under the Deed, Baiada also agreed to rectify any underpayment of wages
by its labour hire contractors that occurred from 1 January 2015 and set aside
$500 000 for this purpose. Claims could be lodged via a dedicated hotline
or email established by Baiada under the terms the Deed. However, the agreement
only applied to workers who lodged claims before 31 December 2015.
In effect, therefore, workers had about two months to lodge a claim following
the official notification of the offer.
At the hearing in Melbourne on 20 November 2015, the committee noted
that the AMIEU had provided evidence to the FWO that indicated Pham Poultry and
NTD Poultry, both of which provided workers to Baiada, owed $434 000 to 32
visa workers and $134 000 to 20 visa workers respectively. The committee
was therefore keen to understand why Baiada had limited claims to the period
beginning 1 January 2015 and whether $500 000 was sufficient to cover
those claims. Mr Onley stated that the figure of $500 000 was achieved in
consultation with the FWO and that the FWO had 'agreed with Baiada that
$500 000 for claims post-January 1 is a sufficient amount to cover those
claims'. In response to the evidence of visa worker exploitation going back two
or more years, Mr Onley defended the company by stating that 'Baiada has not
been party to any exploitation of workers'.
The committee then drew Mr Onley's attention to section C on page one of
the Deed that stated:
Prior to November 2013, the Fair Work Ombudsman (FWO)
received requests for assistance from contract workers at Baiada's Beresfield
plant alleging that they were being underpaid by their contractor employer,
forced to work extremely long hours, and required to pay high rents for
overcrowded and unsafe employee accommodation.
Mr Onley therefore undertook to investigate any information regarding
claims prior to 1 January 2015, to work through it with the FWO, and to take
any such matters to the Baiada board.
With regard to union engagement, Mr Onley said Baiada had 'an open
dialogue with the NUW and the AMIEU':
I am holding meetings at both a national and a state level
directly with those organisations—Grant Courtney from the AMIEU, Chris Clark
from AMIEU's southern division, and NUW's Alex Snowball; I have met with Alex
again this week. We have given information on the hotline and the process we
are going through, and I have encouraged them to use that process to give us
the information on any claims that they may have or their members may have.
Baiada advised that as at 20 November 2015, Baiada was investigating 16
claims that met the criteria under the Deed with regard to underpayment.
Mr Onley also pointed out that Baiada had 'taken unlimited responsibility for
any underpayment to contract workers', should it occur in the future.
On 9 February 2016, Baiada advised the committee that it had reviewed
and processed the claims it received under the terms of its Deed with the FWO. However,
Baiada provided no specific details on the numbers of claims received or
In the spirit of the proactive compliance partnership, we
have provided the FWO with our proposed response to each claim and believe it
is appropriate to receive the FWO's final concurrence before confirming any
specific information in relation to the claims.
Once consultation with the FWO has been finalised we will
contact the claimants with the outcome of their inquiry along with an
explanation of how the claim was determined.
In the meantime, we are writing to claimants informing them
that we have reviewed their claim, that we are working with the FWO on
finalising the claim and that they will be notified of the outcome as soon as
In terms of its internal compliance processes prior to May 2015, Mr
Onley advised that Baiada conducted checks on all its principal contractors and
received 'assurances' from the company directors and 'information from their
accountants in some cases'.
Based on the FWO report, Baiada had agreements at that time to source labour from
six principal contractors for its NSW operations: B & E Poultry Holdings
Pty Ltd; Mushland Pty Ltd; JL Poultry Pty Ltd; VNJ Foods Pty Ltd; Evergreenlee
Pty Ltd; and Pham Poultry (AUS) Pty Ltd.
In response to a question on notice about the information Baiada had
requested from the directors of the principal contractors and the responses
that Baiada had received from those directors, Baiada undertook to provide the
committee with the information. Baiada provided the committee with:
two letters, one it had sent to Mr Xu Chun Dong of B & E
Poultry Holdings Pty Ltd on 19 April 2013, and one it had sent to Mr Binh
Nguyen of Pham Poultry (AUS) Pty Ltd on 19 April 2013;
an unsigned letter on Pham Poultry company letterhead stating:
This is to confirm that the company is paying its employees
and other persons engaged in performing the work under our agreement as a
minimum and amount equivalent to the appropriate and current rate as defined by
namely MA000074 – Poultry Processing Award 2010.
Should you have any question regarding this please do not
hesitate to contact us.
A letter from Pham Poultry's accountant stating:
Based on records and information supplied, we confirm that
this company is compliant with its obligation in relation to the direct
employees’ entitlements in accordance with Poultry Processing Award 2010
One week of payslips for 12 employees.
With respect to the above documents, the committee notes the following.
Firstly, Baiada only provided the committee with a response from the director
of one principal contractor and their accountant. Secondly, these are the same
documents examined by the FWO in its investigation of Baiada's labour supply
arrangements in NSW. Thirdly, the FWO reported that payslips showing one week
of wages for 12 employees (one being the Pham Poultry company director) revealed
wage payments totalling $6828.63 compared to payment made by Bartter
Enterprises Pty Ltd to Pham Poultry of $196 307.01 for that week.
Fourthly, on the basis of the above documents, Baiada advised the FWO 'they
were satisfied that Pham Poultry was compliant with Commonwealth workplace laws'.
Fifthly, the FWO was of the view that the above documentation was not able to
support Baiada's conclusion that Pham Poultry was compliant with Commonwealth
Given Baiada has stated it was unaware of the level of subcontracting
until after it conducted its own review in May 2015,
a question arises as to why Baiada was satisfied that a principal contractor to
which it paid $196 307.01 for a week's worth of wages in October 2013 was compliant
with all workplace laws when the FWO found that contractor was only making
total wage payments of $6828.63 for that same week.
A substantial body of evidence to this inquiry demonstrated blatant and
pervasive abuse of the WHM visa program by a network of labour hire companies
supplying 417 visa workers to businesses in the horticulture sector and the
meat processing industry.
It was clear from the evidence that these labour hire companies have a
particular business model. There are a number of labour hire companies in
Australia with close links to labour hire agencies in certain south-east Asian
countries. Workers on 417 visas are recruited from countries such as Taiwan and
South Korea and brought to Australia specifically to work in meat processing
plants. The scale of the abuse is extraordinary, both in terms of the numbers
of young temporary visa workers involved, and also in terms of the exploitative
conditions that they endure.
Work in a meat processing plant is hard, fast, and potentially
dangerous. The committee heard evidence from the 417 visa workers themselves that
when they arrived in Australia, they often had to wait before they could begin
work, but still had to pay rent to the labour hire company. Work as such began
at a meat processing facility where the temporary visa workers had to undergo a
four to six week 'training' program. The visa workers worked about 60 hours a
week and got paid $200 for 9.5 hours work. However, the labour hire
company recouped its $200 a week outlay, because the four weeks at $200 a week
was deducted from the visa workers' wages once the visa worker was placed in a
'real' job. In practice, therefore, 417 visa workers work 60 hours a week for
four weeks in a meat processing plant and get paid nothing.
On completion of their 'training', the 417 visa workers were given a job
where they were required to work regular 12 to 18 hour shifts 6 days a week.
They were frequently denied proper breaks and often had to keep working or
return to work early after suffering workplace injuries. The pay rates were
appalling. Most received around a flat $11 or $12 an hour irrespective of
whether this was the night shift, the weekend, or overtime hours. These wage
rates are illegal and clearly breach award minimums.
Poor or non-existent record-keeping was endemic across the labour hire
companies mentioned in this inquiry. This has serious implications for ensuring
compliance with legal minimum conditions of employment. The 417 visa workers
never met the head labour hire contractor and only had a mobile number to
receive texts about the start time for their next shift. The committee received
many documents including fake timesheets and envelopes with a figure scrawled
on it instead of a proper timesheet. The workers were paid in cash with no
deductions for tax.
When the shift was over, these workers returned to squalid and
overcrowded accommodation with no proper facilities, for which they were
charged exorbitant levels of rent by the labour hire contractor. The rent
payments were deducted straight from the workers' pay packets, most of the time
in clear contravention of the law.
This raft of exploitative and illegal activity has been corroborated by
the FWO in various investigations conducted over recent years. The committee is
particularly concerned that, in light of the evidence it has received during
the inquiry, that the levels of exploitation that have been documented in this
chapter are not isolated instances, but appear to be pervasive, particularly
amongst a group of labour hire contractors supplying temporary visa workers to
particular sectors of the economy.
The committee notes that the AMIEU has had a cooperative approach to the
major industry employers in the meat processing sector and has not sought to
name and shame employers, but has instead sought to work with the respective
businesses in order to help the employer address issues such as underpayments.
In this regard, the committee notes that the AMIEU had, over a
considerable period of time, been raising these matters with Baiada. The
committee also notes that Baiada was paying substantial sums of money to
principal contractors, one of whom did not engage any employees directly,
another that only directly engaged one chicken processing worker, and another
that only paid a wage bill that was a tiny fraction of the money received from
Baiada. This last point is confirmed, in part, by documents Baiada gave the
committee. Given the above, therefore, the committee can only conclude that, at
best, Baiada was turning a 'blind eye' to the exploitation that was actually
occurring at its sites and within its labour supply arrangements.
In light of the above, the committee makes a number of points. First the
committee did not receive evidence about the widespread exploitation of 417
visa workers directly employed by growers and producers. Indeed, the committee
heard from growers about how much they value the visa workers that work for
Nevertheless, the committee received evidence that points to a potential
loophole in the Horticulture Award as opposed to the Poultry Award. Piece rates
are allowed under the Poultry Award so long as there remains a requirement to
ensure workers receive wages that equate to award minimums. By contrast,
evidence to the committee indicated that no such safety net exists within the
Horticulture Award. While the piece rate may provide an incentive that allows
people to earn much more than the award, the committee is concerned that the
piece rate may also mean that people working in the horticulture sector may
earn much less than the award.
Evidence to the inquiry from both growers and unions indicated a
preference for the direct employment of labour where possible. This is a preference
that the committee endorses. The committee recognises, however, that labour
market dynamics vary considerably and that the seasonal fluctuation in the
number of workers required, particularly in horticulture and fruit production,
means that the direct employment of workers is not always possible or
preferable. Further, as noted in chapter 4, it appears that the government has
not addressed in a considered and holistic way the particular labour market
needs of certain sectors in rural Australia. This has led, in part, to the
current over-reliance on the poorly regulated WHM visa program.
Given that certain sectors of the economy have a requirement for
temporary visa workers, the committee endorses the work of industry
organisations such as Growcom that has developed an education and training
program for employers on matters such as compliance with workplace laws.
Indeed, there is a lot that employers can do. This is demonstrated, in
part, by the recent response of Baiada, particularly in terms of measures such
as stipulating that a labour hire company is not allowed to subcontract to
another labour hire company for the provision of labour, implementing electronic
timekeeping, ensuring that all wage payments are made by electronic bank
transfer and not in cash, and enforcing compliance monitoring and auditing.
However, these measures may not be enough to stamp out the exploitative
practices of a group of unscrupulous labour hire contractors across a range of
industry sectors. The committee therefore has more to say on the regulation of
labour hire companies in chapter 9.
The vulnerability of WHM visa holders stands in stark contrast to the
rights and protections accorded to workers employed under the Seasonal Worker
program. Indeed, the optimistic view of the WHM program espoused in previous
inquiries has been tarnished by the illegal and disturbing treatment of WHMs recounted
in this chapter.
Finally, the committee notes that, given the temporary nature of their
visa, many 417 visa workers have left the country without having had the
opportunity to pursue a legal remedy for their underpayments. The committee
therefore reiterates the view expressed in chapter 6, namely that, where
required, access to a bridging visa to pursue a meritorious workplace claim is
a necessary part of ensuring that temporary visa workers enjoy the same access
to the law that an Australian worker would in similar circumstances.
Finally, the committee also received evidence about proposed changes to
the tax treatments of WHMs. A consistent theme throughout this inquiry has been
that the keeping of accurate employment records is essential for ensuring
compliance with workplace laws. The committee is therefore concerned that an
overly onerous tax regime applied to WHMs could give rise to unintended
consequences. The consequences could include a perverse incentive for WHMs to
seek cash in hand work to avoid a high tax regime, and for employers to offer a
below the award cash rate to WHMs. This would risk entrenching illegal rates of
pay in certain sectors and place further downward pressure on wages. In
addition, it is by no means certain that the measure, as currently conceived,
would raise the predicted tax revenue.
The committee is therefore of the view that the government should
re-examine its proposed tax changes to WHM visa holders, including giving
consideration to other proposals such as that put forward by the NFF.
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