Resources: Blogs

Shamming it up

Blogs
|

Cleaners misclassified as independent contractors back paid $1.9 million

Earlier this month, the Fair Work Ombudsman (FWO) announced that cleaners working at hotels run by Oaks Hotels & Resorts Limited (Oaks), a major operator of more than 43 properties across Australia, have been back paid a total of $1.9 million.

Earlier this month, the Fair Work Ombudsman (FWO) announced that cleaners working at hotels run by Oaks Hotels & Resorts Limited (Oaks), a major operator of more than 43 properties across Australia, have been back paid a total of $1.9 million.

This significant back payment followed a FWO inquiry earlier this year which resulted in Oaks and its cleaning contractor (and related company), Housekeepers Pty Ltd (Housekeepers) entering into enforceable undertakings with the FWO. The enforceable undertakings required a number of commitments from the companies, including classifying workers correctly, paying them the right wages and rectifying past underpayments.

Internal audits conducted to meet the obligations of the enforceable undertakings revealed that 1502 cleaners at more than 40 hotels had been underpaid.

At the time the hotel cleaning services inquiry was launched, Housekeepers was engaging workers as independent contractors and paying them on a per-room rate, rather than paying them wages as employees. As a result, the workers were not receiving their correct entitlements.

The back-payment from Oaks and Housekeepers is just the latest in a string of recent developments concerning independent contractors, the supply chain and employee entitlements.

Last year the High Court handed down its decision in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45, which found that two housekeepers were subject to “sham contracting” when their employer misrepresented their arrangement as one of independent contracting when in fact the cleaners were employees.

Also in 2015, the FWO released the results of its inquiry into the labour procurement arrangements of the Baiada Group, which operates in the poultry industry. The inquiry found significant non-compliance with workplace laws and complicated contracting and sub-contracting arrangements. The FWO said in its inquiry that one of its objectives was to discover who in the supply chain was responsible for the exploitation of workers.

The FWO has recently demonstrated an increased willingness to look not just at the true employer, but who in the supply chain sets the price of labour and benefits from the labour procurement arrangements.

In her statement on the hotel cleaners inquiry in May 2016, Natalie James (the current Fair Work Ombudsman) 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 their workforce without ensuring good governance and compliance.”

Ultimately, the above examples of sham contracting and supply chain non-compliance should serve as warnings to businesses that ‘contract out’ their workforce. Where contracting arrangements are in place, businesses should take steps to ensure that their contractors are classifying their own workers correctly and paying employment entitlements where owed. Failure to do so could result in difficulties for both the business and the contractor.

 

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

 

Similar articles

FWO secures penalties against bar operator and external accounting firm

Closing time

The Fair Work Act 2009 (Cth) requires employers to keep certain employee records for a period of 7 years. These records are necessary to ensure that employees have been paid their minimum entitlements should an underpayment claim be made.

Read more...

Underpaying employer ordered to pay $475,200 in penalties

Pecuniary penalties no longer a matter of degrees

The Federal Court of Australia has issued one of its first penalty decisions since the High Court of Australia’s decision earlier this year of Australian Building and Construction Commissioner v Pattinson [2022] HCA 13.

Read more...

Commission applies test confirmed by High Court in distinguishing between employee and contractor

Sham slam

In a recent decision, the Fair Work Commission has applied the test recently confirmed by the High Court of Australia in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2, in distinguishing between employees and contractors.

Read more...

Commission confirms inappropriate touching constituted sexual harassment warranting summary dismissal

‘Scuse you

Sexual harassment in the workplace has been the subject of significant reform over the past few years, with an even greater onus on employers now to take proactive measures to minimise or eliminate the risk of sexual harassment in connection with work.

Read more...

Employers delay sinks bid for injunctive relief

Speak now

When seeking to enforce a restraint, it is important that employers seek to enforce the restraint in a timely manner to prevent future or an ongoing breach. Any delay will be considered by the courts when assessing whether it is reasonable to enforce the restraint.

Read more...

Two-year post-employment restraint on hairdresser found to be unreasonable

Splitting hairs

When it comes to drafting post-employment restraints in employment contracts, it is important for employers to consider the purpose of the restraint and whether or not the restraint reasonably serves that purpose.

Read more...

Let's talk

please contact our directors to discuss how ouR expertise can help your business.

We're here to help

Contact Us
Let Workplace Law become your partner in Workplace Relations.

Sign up to receive the latest industry updates with commentary from the Workplace Law team direct to your inbox.