A Fair Work inquiry into Woolworths’ cleaning services at its supermarkets in Tasmania has uncovered “rampant exploitation”of cleaners, according to the Ombudsman.

The inquiry, which commenced in 2014, looked into contracting arrangements for cleaners at all 31 of Woolworths’ Tasmanian sites, as well as seven Coles sites (44 per cent of Coles’ Tasmanian sites) and 17 IGA sites (21 per cent). The focus on Woolworths sites was due to it being the only retailer of the three in Tasmania outsourcing its cleaning.

Fair Work Ombudsman Natalie James said the inquiry uncovered breaches across 90 per cent of Woolworths’ Tasmanian sites, including cases of contractors paying cleaners as little as $7 per hour for training and $14 per hour for work.

Cleaners were also often paid in unrecorded cash-in-hand payments with no pay slips provided. Eighty-four per cent of sites’ workplace records were inaccurate or not kept at all.

“The impact of record keeping failings is exacerbated by the use of cash payments which, while lawful, make it difficult to determine with any certainty the extent of underpayment of wages by the contractors,” James said.

In addition, Woolworths failed to monitor its contractors to ensure policies around identification cards, use of visitor books and auditing were being followed, exposing cleaners to potential work health and safety risks and exploitation by subcontractors.

“Woolworths should have been putting the same effort into monitoring its contractors’ compliance with workplace laws as it did into scrutinising the cleanliness of their stores,” James said.

“It is not enough for businesses to simply have governance systems in place if they do not follow up to check that contractors within their networks are complying with those systems.

“Businesses need to step up and be active in their responsibility to ensure that workers in their supply chains are being paid appropriately and treated fairly.”

To date, the inquiry has identified more than $64,000 in underpayments, with more than $21,000 of these having been rectified. The Fair Work Ombudsman has initiated two litigations as a result of the inquiry and has also referred three contractors to the Australian Taxation Office concerning cash payments and misleading or false tax declarations.

Compliance Deed to extend to cleaning

The Ombudsman has recommended the supermarket giant extend its Proactive Compliance Deed, entered into last year following similarly serious non-compliance in its trolley collecting supply chains, to also cover its cleaning supply chain.

“While we acknowledge that Woolworths has since taken steps to improve compliance within its labour supply chain, it is clear from our findings that at the time of the inquiry a culture of non-compliance was prevalent amongst contractors on its sites,” James said.

“While it is primarily the direct employer’s responsibility to ensure its workers are receiving their proper entitlements, once again I must emphasise that responsibility in a supply chain involving vulnerable workers goes all the way to the top.

“I am pleased that since the commencement of the inquiry, Woolworths has implemented improvements in its governance arrangements and is continuing to work constructively with my agency to make further positive changes.”

Woolworths to implement cleaning initiatives

A Woolworths spokesperson told INCLEAN since the report was undertaken by the FWO three years ago, Woolworths has undertaken a comprehensive procurement process for cleaning services in the state. None of the suppliers identified in the Ombudsman’s report still work for the group.

Woolworths has implemented a number of key measures to ensure compliance by its contractors in relation to their employees when it comes to cleaning services, including mandatory third party audits for all cleaning head contractors; the establishment of a confidential hotline for contractors to report potential workplace issues; and in-store education programs.

This year Woolworths will introduce a nation-wide  training program for employees and head contractors as well as a third-party payroll system. There will also be an increase in the amount of audits carried out each year.

“Woolworths will continue to work closely with the Fair Work Ombudsman as we incorporate enhanced management of our cleaning contractors throughout Australia,” the spokesperson said.

“We’re also committed to paying cleaners if they’re found to be underpaid for cleaning services provided to Woolworths, and where the relevant subcontractor employing entity fails to rectify the underpayments.

“Cleaners are an integral part of our store teams, providing an essential service across Woolworths’ sites, not just in Tasmania, but nationwide. We’d like to thank them for their continued hard work and support of our store teams.”

The Ombudsman is calling on Woolworths, Coles and IGA to become members of the Cleaning Accountability Framework. 

“Major companies must take the lead in promoting a culture of compliance with workplace laws, beginning with their own contracting networks. Through joining the Cleaning Accountability Framework and certifying its supermarket sites, the major retailers can lead the sector in modelling best practice,” James said.