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The cautionary tale of trolley collectors and supermarket supply chains

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Once upon a trolley...

The plight of trolley collectors has been a focus of the Fair Work Ombudsman (FWO) for many years, and the Australian Industrial Relations Commission before that. In 2011, the FWO shifted its focus to the end users of the trolley collecting supply chain – big supermarkets.

The plight of trolley collectors has been a focus of the Fair Work Ombudsman (FWO) for many years, and the Australian Industrial Relations Commission before that.

In 2011, the FWO shifted its focus to the end users of the trolley collecting supply chain – big supermarkets. The FWO raised its supply chain concerns with Coles noting that Coles’ trolley collection contractor engaged its own subcontractors who, in turn, employed the trolley collectors. This meant that Coles was significantly removed from the employment practices of the subcontractors and the employment conditions of their employees.

A number of the subcontractors in the supply chain were subsequently found to have been significantly underpaying their employees. The FWO named Coles in a number of proceedings against the subcontractors, claiming that Coles was involved in the underpayments. Coles argued that its contractor was responsible for providing the trolley collecting services and for ensuring that subcontractors were complying with workplace laws. However, in an effort to make good, Coles agreed to enter into an enforceable undertaking with the FWO, which commenced in 2014.

An enforceable undertaking with the FWO is essentially a set of promises that an employer or business makes to take certain corrective actions and do particular things in the future to promote compliance with workplace laws. If a business fails to comply with the terms of an enforceable undertaking, the FWO can take legal action against the business.

As part of its enforceable undertaking, Coles committed to a range of actions, including bringing trolley collecting in-house, making payments to the underpaid trolley collectors employed by subcontractor (to the tune of $220,000) and reporting annually to the FWO on future underpayment claims.

Coles recently completed its second annual report under the enforceable undertaking. The report showed that 85% of Coles’ sites now engage trolley collectors directly employed by Coles and trolley collector underpayment claims have decreased.

Whilst the FWO has commended Coles for its efforts to stamp out exploitation in the trolley collecting industry, Coles still has more to do as the enforceable undertaking, and the ongoing actions required under it, will continue until 31 December 2018.

There are two important lessons to take away from the example set by Coles. The first is the value of enforceable undertakings in correcting missteps and avoiding prosecution by the FWO. If a FWO audit shows that a business has made mistakes in its employment practices, working cooperatively with the FWO can avoid litigation and can help to right any wrongs.

The second lesson is about the importance of carefully examining your business’ supply chain. Coles captured the FWO’s attention because its contracting processes failed to detect the potential for worker exploitation. Businesses should ensure that any contractor they work with complies with their obligations under workplaces laws and in turn, requires that their subcontractors do the same. If in doubt, look at keeping things in-house where you can control the payroll.

 

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