A major Australian hotel chain has back-paid 1500 of its cleaners $1.9 million after underpaying them as a result of mis-classifying them as independent contractors rather than employees.
The back-pay has been recovered for cleaners at Oaks Hotels & Resorts Ltd as a result of the Fair Work Ombudsman’s Inquiry into the practices of some major 4-and-5-star hotel operators when procuring cleaning services.
The Inquiry found Oaks used its subsidiary entity, Housekeepers Pty Ltd, to engage cleaners as ‘independent contractors’, when the cleaners’ correct classification was as employees.
The cleaners were mostly overseas workers and were paid on a per-room-cleaned basis. However, they were in fact lawfully entitled to receive minimum employee wages and conditions under fair work laws and modern awards.
The Oaks Hotels and Housekeepers agreed to enter into Enforceable Undertakings with the Fair Work Ombudsman earlier this year, as an alternative to legal action.
The EU requires that Housekeepers conduct a self-audit and rectify all underpayments of cleaners stemming from the mis-classification. The self-audit has now identified that 1502 cleaners across Oaks’ more than 40 Australian hotels were underpaid a total of $1.9 million between August, 2015 and August 2016.
This was a result of underpayment of cleaners’ minimum wages and superannuation, as well as significant unlawful deductions from their pay for a range of reasons, including for public liability insurance, chemicals and equipment, administration fees, payroll tax and uniforms.
Housekeepers, which now engages cleaners as employees, has back-paid the workers in full.
Fair Work Ombudsman Natalie James says the outcomes highlight the ability of her Agency to use Inquiries and EUs to get companies with significant non-compliance issues to take responsibility for resourcing and driving rectification of their issues – in some cases, achieving outcomes that could not be achieved through litigation in the Courts.
This case highlights the need for lead businesses in Australia to consider the steps they can take to enhance compliance in their supply chains.
“It’s not about removing the responsibility of the direct employer – it’s about making sure that those at the top aren’t unfairly benefiting or turning a blind eye to the impacts on the workers at the bottom,” Ms James says.
Ms James warns “it is now a normal part of our work when we find exploited workers to look up the supply chain and ask: what part has the business benefitting from the labour had to play in what has occurred?” Ms James says the cleaning industry often involves vulnerable workers at the bottom of complex supply chains and has been a priority for her Agency.
Source: Fair Work Ombudsman Media Release 9 November 2016
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