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Labour Supply Chain and Underpayments

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Chain Reaction

Department store Myer has come under increased pressure from the Fair Work Ombudsman (FWO) after it declined to enter into a voluntary compliance deed with the regulator.

Department store Myer has come under increased pressure from the Fair Work Ombudsman (FWO) after it declined to enter into a voluntary compliance deed with the regulator.

The voluntary compliance deed was offered after claims of underpayment and sham contracting arrangements from cleaners engaged by companies who are subcontracted to Spotless, the head contractor responsible for Myer’s cleaning services.

The voluntary compliance deed would have required Myer to ensure that all employees down the chain of subcontractors paid employees the correct minimum terms and entitlements in accordance with the relevant award.

The FWO regularly uses voluntary or proactive compliance deeds with companies to ensure compliance. Recently, poultry processor and suppliers, Baiada Poultry Pty Limited and Bartter Enterprises Pty Limited (the Baiada Group) entered into such a deed following the FWO inquiry which revealed underpayments, poor labour supply chain governance and exploitation of foreign workers. As part of the terms of the compliance deed, the Baiada Group had to publicly state that it has “a moral and ethical responsibility” to ensure that contractors and entities in its labour supply chain comply with workplace laws and provide equal, fair and safe opportunities to workers.

The FWO practice of offering voluntary compliance deeds raises questions on the responsibility of principals to examine and inquire whether workers of its subcontractors are being paid the minimum terms and entitlements.

At present, the Textile, Clothing, Footwear and Associated Industries Award 2010 explicitly outlines the responsibilities of outworkers, including that “A principal must apply the NES to the worker as though the worker is an employee, whether or not the principal is an employer or the worker is an employee”.

Similarly, the Building Code 2013 also sets out the responsibilities of building contractors and subcontractors to ensure the chain comply with their applicable industrial instruments.

This indicates a new level of scrutiny applicable to subcontracting arrangements in general industry sectors where the subcontracting chain of responsibility is not specifically regulated.

 

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.

 

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