MCG head contractor penalised for underpayments

A surprise night visit to the MCG by Fair Work Ombudsman inspectors to investigate exploitation of overseas workers in the venue’s supply-chain for cleaning staff has led to a $132,217 penalty against the Australian arm of a global cleaning company.

ISS Facility Services Australia Limited, which holds a contract to provide a variety of cleaning services at the MCG, received the penalty in the Federal Circuit Court as a result of the investigation which revealed 11 overseas workers were underpaid $37,471 for cleaning work at the MCG after AFL matches in 2014. Given ISS was not the direct employer of the 11 exploited cleaners, the Fair Work Ombudsman used accessorial liability laws to hold ISS lawfully accountable for its part in the workers being underpaid.

The 11 cleaners were employed by First Group of Companies Pty Ltd, a now-deregistered company ISS had subcontracted between 2009 and 2014 to provide post-event cleaning services at the MCG. ISS admitted that in 2014 the rates it paid First Group of Companies were “not sufficient to cover the employees’ entitlements” and that it was aware of the unlawfully low rates First Group of Companies was paying workers.

The Fair Work Ombudsman commenced its investigation into the MCG’s supply chain for cleaning staff in 2014 in response to media reports and intelligence suggesting significant compliance issues. A key part of the investigation was a team of six Fair Work inspectors making a surprise visit to the MCG after the AFL preliminary final between Hawthorn and Port Adelaide in September 2014 to speak to cleaners.

Once inspectors made cleaners aware of their presence and the purpose of the visit, the workers inundated inspectors with their desire to tell their stories. The inspectors spoke to about 44 cleaners between about 9pm and just after midnight.

The workers were mostly international students from India, the Philippines, Colombia and Brazil. Many said they had obtained work at the MCG through word-of-mouth and friends. First Group of Companies had engaged the cleaners under sham contracts, treating them as independent contractors despite their correct lawful classification as employees.

The investigation discovered cleaners were paid flat rates of between $18 and $25 an hour, which failed to meet minimum pay and entitlements under the Cleaning Industry Award 2010. Under the award, the workers were entitled to rates of between $18 and $46 for some shifts.

Fair Work Ombudsman Natalie James says the significant penalties handed down should serve as a wake-up call to any head contractors who think they can turn a blind eye to non-compliance by the subcontractors they engage.

In Court, ISS submitted that it had been a “third party” to the underpayments. However, Judge Suzanne Jones said that “in light of the admissions” made by ISS “it is simply incorrect to describe [ISS] as a ‘third party’, if the use of that word is designed to minimise or reduce [ISS’s] responsibility for its involvement in the contraventions”.

In imposing 43 per cent of the possible maximum penalties against ISS, Jones said principal contractors “must be deterred” from using non-compliant subcontractors. She also imposed penalties of $17,926 against each of the former owner-operators of First Group of Companies – Sharad Patel and Sidarth Luthra – for their involvement in sham contracting, frequency of pay and pay slip contraventions by their company.

The penalties take total penalties secured by the Fair Work Ombudsman in the case to $168,070. First Group of Companies rectified the underpayments in full before it was deregistered.

 

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