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Fair Work Ombudsman fines ISS Facility Services for underpaying MCG cleaners

Fair Work Ombudsman fines ISS Facility Services for underpaying MCG cleaners
May 30, 2018

The Federal Circuit Court has fined ISS Facility Services Australia Limited $132,217 for underpaying overseas cleaning staff at the MCG in 2014.

The ruling follows a surprise night-time visit by six Fair Work inspectors to the MCG after AFL matches in 2014 where they discovered 11 overseas workers who had been underpaid $37,471 for cleaning work.

The 11 workers, mostly international students from India, the Philippines, Columbia and Brazil, were underpaid individual amounts ranging from $276 to $7272 over a five-month period.

The Fair Work Ombudsman said it used accessorial liability laws to hold ISS lawfully accountable for its part in the workers being underpaid within its supply chain.

First Group of Companies Pty Ltd, a now-deregistered company, employed the 11 cleaners and was subcontracted by ISS between 2009 and 2014 to provide cleaning services at the MCG.

The Federal Circuit Court heard ISS admitted to knowing in 2014 that 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 that First Group of Companies had paid workers. The court heard ISS admitted its conduct contravened workplace laws.

In Court, ISS submitted 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 responsibility for its involvement in the contraventions”.

The Ombudsman started investigating the MCG’s cleaning staff supply chain in 2014 in response to media reports and intelligence suggesting serious compliance issues.

As reported by The Age, the Ombudsman alleged First Group of Companies hired the cleaners under sham contracts, treating them as independent contractors despite being employees.

The cleaners were paid flat rates of between $18 and $25 an hour which was less than minimum pay and entitlements under the Cleaning Industry Award, including penalty rates. The workers were entitled to rates of between up to $46 under the Award.

Fair Work Ombudsman Natalie James said the significant penalties were a wake-up call to any head contractors who thought they could turn a blind eye to non-compliance in their labour supply chain.

James advised “this case provides a clear example of what can happen if you fail to actively manage your contractors in high risk sectors.

“Price-driven procurement that disregards the cost of wages and the dynamics in the market is a recipe for exploitation of vulnerable workers.

“Proving accessorial liability can be complex and I’m pleased that in the cases we have been able to obtain the evidence necessary to hold those involved in breaches of workplace laws to account.”

Judge Jones 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 Fair Work Ombudsman secured a total of $168,070 in penalties in the case.

First Group of Companies rectified the underpayments in full before it was deregistered.

ISS Facility Services Australia Limited is part of the ISS Group that has operations in more than 45 countries. 

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We hope that you value the news that we publish so while you're here can we ask for your support?

The news we publish at www.ausleisure.com.au is independent, credible (we hope) and free for you to access, with no pay walls and no annoying pop-up ads.

However, as an independent publisher, can we ask for you to support us by subscribing to the printed Australasian Leisure Management magazine - if you don't already do so.

Published bi-monthly since 1997, the printed Australasian Leisure Management differs from this website in that it publishes longer, in-depth and analytical features covering aquatics, attractions, entertainment, events, fitness, parks, recreation, sport, tourism and venues management.

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