Earlier this year, we told the tale of the of the trolley collectors in Once upon a trolley – an ongoing saga involving underpayments, vulnerable workers and the Fair Work Ombudsman’s (FWO’s) scrutiny of labour supply chains. In that blog, we focussed on an enforceable undertaking that involved Coles supermarkets and the FWO. Now, Woolworths have come to the trolley collectors’ party, this time in the form of a Proactive Compliance Deed with the FWO.
Earlier this year, we told the tale of the of the trolley collectors in Once upon a trolley – an ongoing saga involving underpayments, vulnerable workers and the Fair Work Ombudsman’s (FWO’s) scrutiny of labour supply chains. In that blog, we focussed on an enforceable undertaking that involved Coles supermarkets and the FWO.
Now, Woolworths have come to the trolley collectors’ party, this time in the form of a Proactive Compliance Deed with the FWO.
A Proactive Compliance Deed is an agreement between the FWO and an organisation in which the organisation commits to certain actions for a defined period of time in an effort to take proactive steps (as opposed to reactive action, as in an enforceable undertaking) to ensure compliance with workplace laws.
Although Woolworths has, for some time, taken steps to stamp out non-compliance in its trolley collecting supply chain, a 2014/15 FWO inquiry identified that Woolworths’ management of trolley collection services procurement was not adequately detecting or addressing instances of non-compliance committed by contractors and subcontractors.
As a result, Woolworths has agreed to up its compliance measures in its new Proactive Compliance Deed.
Of particular interest in the Deed are the obligations surrounding Woolworths’ tendering and auditing processes, as well as the access Woolworths will require to employee information maintained by its contractors. For example, under the Deed, Woolworths must ensure that all trolley collecting employees that work at Woolworths’ sites have photo identification linked to a centralised system that identifies their contractor employer. Employee and employer information stored in the centralised system must be made available to the FWO.
The Deed also requires Woolworths to ensure that any contractors it engages have appropriate time keeping systems in place so each employee’s actual hours of work can be record and reviewed. Any employee information contained in a time keeping system must then be made available to compliance auditors who will report to Woolworths.
The Deed goes further to require that, when tendering for a contract to supply trolley collecting services to Woolworths, contractors will have to undergo a “Prequalification Audit,” which they must pass to be eligible for a successful tender.
Woolworths has also committed to examining the contract prices being offered by trolley collecting services to ensure that they are reasonable, taking into account the wages employees will need to be paid for the hours they work.
To improve record keeping of payment of wages, Woolworths must now insist that contractors pay their employees by electronic funds transfer into bank accounts, and not in cash. Cash payments are only allowed in very exceptional circumstances and only if approved in writing by Woolworths.
And finally, if an employee underpayment is identified and the contractor doesn’t rectify the payment in 20 business days, Woolworths has committed to rectifying the payment in lieu of the contractor (the true employer) doing so.
Essentially, the Deed requires Woolworths to ensure that its trolley collecting contractors are willing to open their books to Woolworths so that it, and the FWO, can be confident that employees are being paid appropriately and the contractors are meeting their legal obligations.
For businesses more generally, the Deed provides some good guidance on how to prevent and, if necessary, eliminate non-compliance in the supply chain.
Most contractor agreements will contain a generic clause requiring a contractor to pay its employees properly and comply with workplace laws, but adherence to such clauses often goes unchecked. Failing to ensure compliance, or suspicion about contractor non- compliance, coupled with failure to take follow-up action could spell disaster for a business.
With the FWO’s ongoing push to protect vulnerable workers, more and more focus has been placed on the final users of labour supply – supermarkets in the case of trolley collectors, or hotels in the case of housekeepers. The FWO has demonstrated a willingness to pursue final users, prosecute where it finds non-compliance and refuse to accept wilful blindness as an excuse.
The Deed provides examples of active steps businesses can take to ensure they are taking reasonable, proactive measures to avoid worker exploitation in the supply chain, including:
- requiring a prequalification audit report from potential contractors, demonstrating compliance with workplace laws;
- ensuring that contractors have proper time recording and employee identification systems;
- insisting that contractors pay employees by electronic funds transfer; and
- requiring contractors to complete an annual audit report about compliance with workplace laws in order to keep doing business together.
Proactive steps, rather than reactive fixes, are the best way to protect a business from both reputational and financial damage.
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.