FWO releases findings of Woolworths trolley collection services Inquiry

June 28, 2016
C&I Week
Insights
The Fair Work Ombudsman has released the findings of its Inquiry into the procurement of trolley collection services by Woolworths.
For almost a decade, the Fair Work Ombudsman and its predecessor agencies have investigated allegations against businesses providing trolley collection services to Woolworths.
During that time they have put 13 matters before the courts alleging the underpayment of trolley collectors at Woolworths, Coles and Costco sites.
Since January 1, 2007 more than $700,000 in unpaid wages and entitlements has been recovered for more than 544 trolley collectors nationally.
Findings against Woolworths
Of the 130 Woolworths sites assessed, the Inquiry found:

• Indications of some form of non-compliance at 79 per cent of sites,
• Indications of serious non-compliance at 49 per cent,
• Workers being paid rates as low as $10 an hour at some sites,
• Cash payments used to conceal the true identity of employees and the amounts actually paid to them,
• Manipulation of Woolworths’ identity card system,
• Inaccurate, false or misleading records and failure to issue pay-slips,
• Workers vulnerable to exploitation and often complicit in acts of non-compliance,
• Recruitment of vulnerable workers, and
• Deficient governance arrangements contributing to non-compliance.

Further, as it narrowed its focus to 43 sites involving 11 principal contractors and 35 sub-contractors, the Inquiry determined that Woolworths procurement processes had contributed to a culture of non-compliance by:

• Failing to monitor and enforce its own contractual terms which prohibit sub-contracting beyond one-level,
• Relying on sub-optimum governance systems which, in part, allowed the practices of poor or false record keeping to flourish and resulted in underpayment of workers, and
• Failing to adequately monitor who is performing work at which site and when, and that each worker is appropriately identified and inducted.

There is potential for litigation against further businesses involving alleged underpayment of trolley collectors by more than $100,000.
Nine trolley collection providers have already received formal letters of caution placing them on notice that future contraventions will result in enforcement action.
Recommendations
The Inquiry recommended Woolworths:

• Enter a compliance partnership with the Fair Work Ombudsman,
• Review its current contracting arrangements to ensure that:
  the price permits employee entitlements to be met throughout the life of the contract, and
  tender processes give preference to contractors who pay by EFT or personal cheque, that PAYG is remitted on behalf of workers to the Australian tax Office and that superannuation payments are made.
• Implement systems and processes to ensure local Woolworths management
• Know and record the entities and individuals responsible for trolley collection on a daily basis,
• Have access to records which accurately record times worked and payments owed,
• Ensure its Speak Up helpline is reasonably accessible to people whose first language is not English,
• Take direct responsibility for investigating and resolving all grievances relating to employment of its trolley collectors,
• Conduct regular audits of its contractors and sub-contractors using third-party accounting, legal or workplace relations professionals, and
• Establish and maintain a $1 million fund to cover payments to trolley collectors who have been underpaid and where the relevant employer has failed to back-pay the workers.

Fair Work believes that should Woolworths adopt these recommendations, it will promote and build a culture of compliance in its trolley collector sub-sector.
While acknowledging that outsourcing is a legitimate business arrangement, Fair Work Ombudsman, Natalie James, said: “It is a failure not only of legal responsibility, but moral and ethical leadership, for large corporates to seek to ‘contract out’ the wages and conditions of its workforce without ensuring good governance and compliance”.
Employers and employees seeking information or advice are encouraged to visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice.