Cleaning employers’ 37% non-compliance rate
Given its first cleaning industry educational campaign and audit findings, the Fair Work Ombudsman (FWO) says it achieved stated objectives and it’s likely there will be a second initiative within the next two years. The just released ‘National Cleaning Services Campaign 2010 – 2011, June 2011 report’ revealed an employer wages and conditions’ non-compliance level of 37% while also identifying the need for further investigation of potential sham contracting issues.
United Voice was quick to respond to the FWO’s Campaign report, saying, ‘United Voice supports Fair Work Ombudsman’s (FWO) National Cleaning Services Campaign June 2011 findings that the cleaning industry is in crisis. Based on information from United Voice, the FWO found almost 40% of cleaning companies were guilty of ignoring or being ignorant of workplace laws. This disregard for workers resulted in underpayment of at least 621 cleaners. So far, $242,450 has been paid back to workers, with 51 employers still under investigation.’
United Voice national secretary, Louise Tarrant, said that, “the FWO’s findings support United Voice’s calls for required changes to the contract cleaning industry, which are outlined in recent report The Crisis in Retail Cleaning – It’s everyone’s problem.”
The FWO report observed that the ‘Australian cleaning services sector comprises approximately 15,000 businesses ranging from sole traders to large national public companies. According to the Australian Bureau of Statistics (Labour Market statistics, April 2010) the cleaning industry had a workforce of 273,700 individuals, equating to 2.5% of the Australian workforce.
‘Analysis of complaints received by Fair Work Ombudsman between July 2009 and April 2010 revealed that the Building and Cleaning Services industry was ranked third in terms of the total number of complaints received.’
The Campaign was conducted between September 2010 and May 2011. It provided an opportunity to educate the industry about the changes introduced by the Fair Work Act 2009, Cleaning Services Award 2010, the National Employment Standards (NES), and where to access further information regarding workplace obligations.
Following an education phase that covered more than 15,000 cleaning entities on the Australian Business Register, the FWO selected 366 entities for audit. At 3 June 2011 inspectors had finalised 315 wage and conditions audits, revealing a non-compliance level of 37.1% (117 employers). Another 51 wage and condition audits are yet to be finalised because of ongoing investigations.
Of the 117 non-compliant employers, 53% (62 employers) had monetary contraventions, 36% (42 employers) had non-monetary contraventions and 11% (13 employers) had both monetary and non-monetary contraventions.
The common contraventions identified related to underpayment of hourly rates of pay, inadequate record keeping practices and minimum shift engagements.
Of the finalised audits, inspectors recovered a total of $242,451 for 621 employees.
During its audit the FWO identified and referred some entities requiring further examination in regard to their contract for service arrangements. These entities were referred to the FWO’s Sham Contracting Operational Intervention project to ensure a consistent and comprehensive approach to investigating potential sham contracting issues.
The FWO report concluded that, ‘the findings of this campaign have been informative in identifying trends and patterns in the cleaning industry. The cleaning industry ranks highly in terms of the number of complaints the agency receives. Further intelligence obtained during this campaign suggests that many employers in the cleaning industry still need assistance in understanding their obligations under Australian workplace laws.
‘A common theme to emerge was that a number of small to medium sized employers are paying their staff a so-called ‘market rate’ (not the award rate, but a rate of pay which their competitors were paying). In some cases this has resulted in employees being underpaid.
‘The level of underpayments contraventions identified in this campaign does not accurately reflect the level of workplace relations knowledge amongst employers. Many employers paid a higher minimum hourly rate, as they did not completely understand the award phasing provisions and/or
loadings and penalties. In most cases the higher flat rate of pay has offset any money owing to employees who have worked hours which attract a penalty or loading.
‘The campaign has been successful in achieving its stated objectives.’
The FWO acknowledged assistance from stakeholders in promoting the campaign. They included the Building Service Contractors Association of Australia, Australian Cleaning Contractors Association, United Voice and INCLEAN.