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Education and Employment References Committee
20/11/2015
Australia's temporary work visa programs

ONLEY, Mr Grant Charles, Human Resources Manager, Baiada Poultry Pty Ltd

CHAIR: Welcome. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. The committee has received your submission/letter. Thank you. I now invite you to make a short opening statement of no more than a few minutes. At the conclusion of your remarks, I will invite members of the committee to put questions to you.

Mr Onley : Firstly, thank you for the chance to appear today to provide information to assist your inquiry. I appreciate the opportunity to make a short statement. Baiada is one of Australia's largest regional employers and has strong links with communities across the country. We employ several thousand workers directly on sites across Australia, many of whom are in rural and regional areas, including Griffith and Tamworth. We are a Western Sydney business with a proud 70-year history of supplying an important product to the nation, and we are one of Australia's largest employers.

We also take our obligations under the Fair Work Act very seriously and have always complied with this requirement. We have been, and remain, extremely concerned by reports of contractor misconduct at our processing facilities. We were surprised by these reports when they emerged because, at the time, we had systems in place that fully complied with the Fair Work Act and we had believed that previous issues which arose in relation to contractors were isolated and had been dealt with appropriately. When the reports alleging contractor misconduct surfaced in May this year, we became concerned that our existing measures were not stringent enough and that more needed to be done to ensure that contracted workers on our sites were not vulnerable to mistreatment. The allegations also made us concerned that we had possibly underestimated the extent to which some individuals may have been circumventing our existing controls.

As human resources manager for Baiada I am the individual responsible for overseeing the policies within the company that relate to the Fair Work Act and the treatment of workers on our sites. I am also head of the project team we have created to ensure implementation of the compliance deed we have entered into with the Fair Work Ombudsman. I have copies of that deed which I am prepared to table today. I am here to answer any questions you may have in relation to the measures we have introduced at our processing facilities as well as our recent partnership with the Fair Work Ombudsman and the proactive compliance deed we have signed with them.

We are committed to ensuring contractors' employees are paid correctly and treated fairly and that the contractors we engage act ethically and lawfully. Here are some of the changes we have made to ensure this occurs. In May this year, with the assistance of Minter Ellison, we initiated a comprehensive review of our workplace arrangement with contractors. Since this review, we have commenced the implementation of the following measures across our business. Baiada terminated the existing agreements with processing contractors at all our processing plants and entered into new agreements with contractors based on the findings of this review. These new agreements place stringent controls on contractors regarding timekeeping; the prohibition of subcontracting; record-keeping; and increased transparency, including a mandate that third parties were to conduct audits of all our contractors' books. We did not offer an agreement to any contractor who could not meet these new criteria. Since this date, we have terminated arrangements with three contractors who, although they signed our new agreements, failed to meet the standards outlined in those contracts. This is a sign of our intent. We have prohibited subcontracting by our contractors. That means all contract workers must be direct employees of the principal contractor.

We are providing workplace policies, procedures and information to workers in a range of languages, including Mandarin, Vietnamese and Korean. We audit our existing VEVO program migrant workers to ensure legitimate work rights for every person working on Baiada sites. We have introduced photo IDs for all workers on our processing sites and we have security checks in place to validate these IDs upon entry. We have introduced time and attendance monitoring systems for all contract workers and, since August this year, all processing workers' time and attendance has been monitored by the electronic time and attendance system at our processing sites—that is, every contract worker now swipes in and swipes out using the Kronos system.

We have taken full responsibility for making payments of wages and entitlements of contracted employees. We pay the wages directly into employee bank accounts and we pay superannuation directly into their superannuation accounts. I would like to repeat that: we pay the wages into the employees bank accounts and the superannuation into their super accounts on behalf of their employer. We provide workers with pay slips from their employer that comply with the legislation. On behalf of the employee, we also ensure that PAYE tax is paid directly to the ATO. Baiada contractors must commission third-party audits of their workers' payroll records biannually and provide certification from external accountants. We also have the capacity to audit these records to satisfy ourselves of the contractor's compliance.

Many of these measures were already being implemented at our processing facilities when the Fair Work Ombudsman report was published in June of this year. On 26 October this year, in a joint statement, it was announced that Baiada and the Fair Work Ombudsman had entered into a proactive compliance partnership, and we are looking forward to improved communication and collaboration with the Fair Work Ombudsman as we work together to implement and improve our systems. It is right to say the relationship between us and the Fair Work Ombudsman has the same intent and the same determination.

The implementation of the proactive compliance deed is an ongoing focus and a major priority for our business. As has been reported, in addition to the measures I have already stated, as part of the deed's terms we have established a dedicated hotline for workers to call to make an inquiry, to make a complaint or to get help if they believe that they have been underpaid. We are required to provide the Fair Work Ombudsman with copies of all our contractor audits and agreements and submit our own Fair Work Act compliance information to the Fair Work Ombudsman. We are required to provide the Fair Work Ombudsman with all information related to our labour supply contractors. We are also facilitating Fair Work inspectors requiring access to our sites and access to employees of contractors as required by Fair Work Ombudsman. Also, under the deed, Baiada set aside half a million dollars to provide for contract employees who may have been underpaid from 1 January this year. We have taken unlimited responsibility for any underpayment to contract workers, should it occur, ongoingly. The Fair Work Ombudsman has agreed to this process, agreed to these dates and agreed to this scope. It is all documented within the deed that I have presented today.

Baiada is implementing stringent and robust measures that are underpinned by the commitment to take financial responsibility for contractors' underpayments going forward. As I am sure you can understand, no system is foolproof, and, despite our intensive efforts and our partnership with the Fair Work Ombudsman, there may be the possibility that some individuals will attempt to circumvent our systems. It is impossible to give a blanket guarantee with respect to the behaviour of every single contractor. What we can guarantee, however, is that we are doing our best to make our systems as foolproof as possible against contractor breaches. We believe they can be. We will continue to monitor the effectiveness of our systems, and we will refine them if we see that it is necessary. We also guarantee that, as soon as we receive information about an alleged breach, we will act immediately to investigate it and to address it.

As I hope is evident by the work done by Baiada in the last six months, we have promptly enacted significant and meaningful change to our processing sites that will help safeguard against underpayments and mistreatment of contract workers in the future. Senators, I am sure you will understand that it is not a legal responsibility to implement these measures or take responsibility; however, as we have publicly stated and declared, we do believe we have a moral and ethical responsibility to do so. I thank you for the opportunity to read this statement, and I am here to answer any questions the committee may have.

CHAIR: Thanks, Mr Onley. Of your 6,000 workers, what percentage of those are contract workers?

Mr Onley : Of the 6,000 workers, in rough percentages, it would be around about 13 or 14 per cent.

CHAIR: In what areas do they work predominantly?

Mr Onley : Mainly the processing plants.

Senator McKENZIE: In the boning rooms?

Mr Onley : The majority of them would be in the boning rooms, yes.

CHAIR: In the boning rooms?

Mr Onley : Yes.

CHAIR: Okay.

Mr Onley : Sorry, nearly all of them would probably be in the boning rooms.

CHAIR: Why do you use contract labour in the boning rooms?

Mr Onley : With regard to supply of labour, we have a fluctuation in production levels. We are heavily reliant on our orders from our retailers. If our order goes up by 200,000 chickens, then we need to source labour to bone and process those chickens. The entities that we have engaged have always been able to source that labour for us.

CHAIR: What percentage in the boning rooms is contract labour?

Mr Onley : The majority of employees in our boning rooms are contract labour.

CHAIR: Given that you said your use of labour hire is largely in the boning rooms due to fluctuations, why can't you have a core percentage of staff in the boning rooms as permanent staff and then, when you need it, skill up, if there is no difficulty in finding that labour, as you said?

Mr Onley : Just a clarification, we are not talking about contract labour hire. I am specifically talking about those that are paid on a piece rate under contracts. We do have some labour hire that are employed through labour-hire agencies as temporary labour.

CHAIR: What are you calling the other ones? I thought there was not piece rate after the award?

Mr Onley : There is no requirement you cannot pay piece rate under the award.

CHAIR: Really? I am not sure that is correct but, anyway, we will leave that one there. You have got some staff that are working on piece rates, and you have got some staff that are employed by labour hire. When I asked the question about what percentage of contract workers you had, who is that group referring to?

Mr Onley : The group of contract workers refers to those entities we have a piece-rate arrangement with, primarily for the purpose of boning chickens.

CHAIR: What percentage of the boning room is that contract piece-work group?

Mr Onley : I would say, the majority of it.

CHAIR: Are they locally employed, or are they sourced through labour-hire companies?

Mr Onley : We source them through the entities we have agreements with for that boning work.

CHAIR: So it is through labour-hire companies.

Mr Onley : Through contract enterprises, yes, for places and services.

CHAIR: They are bodies for hired labour.

Senator McKENZIE: They are not direct employees.

Mr Onley : They are direct employees of those labour-hire companies, but—

CHAIR: But they are not yours.

Mr Onley : No.

CHAIR: That is almost 100 per cent of the boning room, is it, who are non-direct employees?

Mr Onley : It would be in the 90s, yes.

Mr Onley : With regard to the boning room?

CHAIR: Yes.

Mr Onley : Yes.

CHAIR: In your direct evidence, you said you are paying—who are you paying directly? Is it labour-hire company employees?

Mr Onley : With regard to the statement I have just made?

CHAIR: Yes.

Mr Onley : With regard to that, we are making the employee payments to the workers of the contractors that we have engaged. We are paying those payments, on behalf of that employer, directly into the employee's bank account.

CHAIR: So you engage a labour-hire company.

Mr Onley : We engage a contractor, yes.

CHAIR: They provide you the names of all their employees and their bank account details, and you pay them?

Mr Onley : Yes. What happens is we engage a contractor for the work. They provide us with the details of the employees. Those employees also provide us details of their tax file numbers, their names, their bank accounts and their superannuation funds, and we make payments based on the electronic time and attendance systems we have put in place and the hours worked at the sites directly into the employees' bank accounts, taking into account the taxation withholding tax. We also hold moneys back from our invoices, to contractors, for purposes of workers' compensation and payroll tax.

CHAIR: How is the tax being paid?

Mr Onley : We provide on a monthly basis, I believe it is, to the ATO, the taxation component based on the payments that are made through the payroll system.

CHAIR: You can pay tax on behalf of a completely separate entity.

Mr Onley : No, we pay that money to the Australian Taxation Office on their behalf.

CHAIR: On the labour-hire company's behalf.

Mr Onley : Yes.

CHAIR: That is what I just asked you. You can pay, directly to the ATO, taxation moneys for ABC contractor.

Mr Onley : For the employees, yes. That is permissible under the tax act.

CHAIR: How many of your labour-hire companies are you directly paying staff for? Is it 100 per cent?

Mr Onley : For contract workers, 100 per cent.

CHAIR: On page 2 of your letter, you say you are ensuring contractors pay their workers at the rate prescribed by the law. Which contractors are they, if you are paying them?

Mr Onley : Again, we have an agreement with our contractors that we make payments on their behalf. The payments are made to their employees, with the payroll, with their—

CHAIR: Yes, I understood that bit. But in your letter, you say 'ensuring contractors pay their workers at the rate prescribed by the law for the correct amount of hours worked'. That seems to say to me that you are doing some checking arrangements, where contractors are paying those workers directly.

Mr Onley : With respect, we have entered into agreements with those contractors that they have outsourced their payroll function to us.

CHAIR: What does that statement mean, then, in your letter to the committee?

Mr Onley : I think it means as it is intended. The companies we have engaged outsource their payroll functions to us based on the time and attendance of their workers in the time-and-attendance system that is put into a payroll system managed by us, which calculates those payments to the employees in accordance with the Poultry Processing Award 2010.

CHAIR: Why do you need to ensure contractors pay their workers at the rate prescribed by the law, if you are paying them?

Mr Onley : Again, we have an obligation and we have taken the obligation to outsiders to be the outsource entity for the payroll function of the contractors.

CHAIR: Why did you say that in your letter?

Mr Onley : Again, we do not have a legal requirement to pay those employees on behalf of the contractor. What we have done is to set up arrangements to ensure we have a payroll system in place that takes the—

CHAIR: I understand that, Mr Onley, but—I am not sure if you have it there—page 2 of your letter says: 'ensuring contractors pay their workers at the rate prescribed by the law for the correct amount of hours worked'. Anyone reading that would take that to mean that you are checking that contractor ABC pays their workers correctly as per the award of the enterprise agreement in place.

Mr Onley : Yes; it does state that. How we ensure that happens is we carry out the payroll function on behalf of those employees to make sure that that company pays their worker the correct amount as prescribed by the Poultry Processing Award 2010.

CHAIR: What do I take the next point, 'commitment to ongoing regular audits of contractor records and other spot checks to ensure contractor compliance with workplace and immigration laws' to mean? Compliance with an award that you pay.

Mr Onley : The measures we have put in place give us that assurance that we can check the wage records, taxation forms and other documentation associated with employment with regard to contract workers' employees.

CHAIR: Perhaps I am missing the point here, Mr Onley, but the wage records from your own evidence are your records.

Mr Onley : The wage records are the employer's records. We have access to them, because they have outsourced their payroll function to Baiada.

CHAIR: You are doing spot checks on your own records, are you?

Mr Onley : No. As part of our agreement with them, we do those records. If it were us or any other entity carrying out that function for them, those records are part of the records. There are also things like the taxation declaration forms. There are also other documents like letters of employment, terms and conditions of employment and induction records that are employee records that the contractor must maintain.

CHAIR: What are the contractor breaches that you want contract process workers to report?

Mr Onley : Again, we have entered into a proactive compliance deed. Any breach, with respect to Commonwealth workplace laws—

CHAIR: Such as?

Mr Onley : Any breach.

CHAIR: A pay breach.

Mr Onley : It could be a pay breach—any breach.

CHAIR: A pay breach that you are paying.

Mr Onley : Yes.

CHAIR: Then why does it say 'the contractor' here?

Mr Onley : I will say it again: the contractor has outsourced—by agreement—that payroll function to us. It is still their responsibility to pay their employees.

CHAIR: Mr Onley, please do not take me as a fool. I have spent most of my working life as a union official. I have done many underpayments. You have told me, under evidence, that you are paying the payroll of contractors. I am asking why you need to have these three dot points on page 2 of this letter, which imply to me that you are checking that the contractor is paying the correct records.

Mr Onley : Baiada has set systems in place to ensure that, for any contractor we engage, workers of the contractor have their payments correctly paid in accordance with Poultry Processing Award.

CHAIR: But these are payments you are making. So you are checking on yourself, effectively.

Mr Onley : As I have stated before, Senator: we are making those payments on behalf of their employer.

CHAIR: On behalf of their employees?

Mr Onley : No. We are making payments to the employees on behalf of their employer.

CHAIR: Yes. So you are checking your own records, are you?

Mr Onley : We are checking records that we have access to; yes, we are, as part—

CHAIR: Your pay records that you have paid to someone else's staff.

Mr Onley : It is part of the checks we undertake, yes.

CHAIR: The checking agreement you entered into with Coles, where is that up to?

Mr Onley : The checking agreement we have entered into—

CHAIR: Coles employed an outside agency to work through the supply chain and look at underpayments. From memory, it was KPMG—I cannot remember who they employed.

Mr Onley : I believe Coles entered into an agreement with PricewaterhouseCoopers, PwC.

CHAIR: Thank you.

Mr Onley : We were not party to that agreement.

CHAIR: That is not what Coles told us.

Mr Onley : We as a supplier to Coles were audited under that agreement—we were not certainly party to the arrangement between PwC and Coles.

CHAIR: You were consulted as part of that review.

Mr Onley : We were audited as part of that review.

CHAIR: Has that review finished?

Mr Onley : I am not quite sure. That is a matter between PwC and Coles.

CHAIR: Coles told us it was a matter between them and you.

Mr Onley : With regard to the engagement of PwC?

CHAIR: Yes.

Mr Onley : I am not aware of that. We did not engage—

CHAIR: What did PricewaterhouseCoopers do? Did they come and look at your records or interview you? What was that procedure?

Mr Onley : PricewaterhouseCoopers came onto our sites and auditors audited records that were available to them and interviewed employees on the site.

CHAIR: What records did they ask you for?

Mr Onley : They asked us to look at those payroll records—I have already explained—that we had access to.

CHAIR: For which period of time?

Mr Onley : Various periods of time.

CHAIR: Can you give those to us today? Up until when?

Mr Onley : Depending on the specific individual they were talking about, they made different requests for different periods of time for those individuals. I do not have that information with me today.

CHAIR: But you had the payroll records.

Mr Onley : If the periods of time were from the beginning of August this year, yes, we would have had access to pay records.

CHAIR: They were not from the beginning of August this year. They predated that. They started around the time of the Four Corners program, I think.

Mr Onley : As I stated before, from August this year we have taken control of time and attendance.

CHAIR: Yes. What did PwC ask you for?

Mr Onley : There are periods of information for individuals. They asked us for any attendance records we had, and we did have time-and-attendance sheets in place since the beginning of August.

CHAIR: Given that you are now paying these employees directly into their bank accounts, who work for contractors—you are paying their super; you are paying their ATO—why don't you employ them directly?

Mr Onley : As I said before, we require the services of entities where we do not have the necessary skills or capacity and organisation to source those resources. It is quite common within the industry to engage contractors, as there is in many industries. We utilise those entities to provide—

CHAIR: What do you mean you do not have the skills?

Mr Onley : We engage entities to do work that we do not necessarily have the skills for. We do not have, within our current workforce, those people capable of performing those boning operations.

CHAIR: But backpackers from Korea can.

Mr Onley : We engage entities who have the necessary skills to perform that work.

CHAIR: Backpackers from Korea have these skills, do they?

Mr Onley : The organisations we engage provide these services not only to Baiada but to other organisations, whether it is—

CHAIR: What is the skill level you are asking these contractors to supply?

Mr Onley : We are asking specific contractors to provide skills in and around the boning of poultry.

CHAIR: Describe to the committee what that skilled work involves?

Mr Onley : It requires, as it says, the deboning of chicken.

CHAIR: What is that skill level? Is it a trade level? Is it a certificate II level? What is it?

Senator O'NEILL: A bachelor degree?

Mr Onley : Under the Poultry Processing Award, it is a level 5.

CHAIR: And what does that mean? Is it related to an AQF level?

Mr Onley : Sorry?

CHAIR: Australian Qualifications Framework.

Mr Onley : Not that I am aware of, Senator.

Senator O'NEILL: Do people have to go to TAFE to get this qualification?

Mr Onley : No, Senator.

Senator O'NEILL: How much training do people need to do in order to be able to bone a chicken?

Mr Onley : I am not in a position that I could quantify that.

CHAIR: You are a human resource manager. Surely you know this.

Mr Onley : I am not in a position that I could qualify how much training you require to do that specific skill for the function.

Senator O'NEILL: Do you train any boners at all?

Mr Onley : We do have some boners in our workforce.

Senator O'NEILL: How much training did you do to make them able to be a boner?

Mr Onley : I am not in a position where I have records as to training for—

Senator McKENZIE: Who does the training in your organisation? Who is responsible for the training of your staff?

Mr Onley : We have various levels of training. We have training in processing work—

Senator McKENZIE: Yes, but who is responsible for it?

Mr Onley : Who is ultimately responsible for the training in each of the sections?

Senator McKENZIE: Yes.

Mr Onley : The general manager of the operations.

Senator McKENZIE: And then I am assuming that you have a middle management structure.

Mr Onley : Yes.

Senator McKENZIE: Who in the middle management structure is responsible for reporting to the general manager on the training of staff within the organisation?

Mr Onley : It would be the HR and IR resources in those locations.

Senator McKENZIE: So it is you, Mr Onley?

Mr Onley : Ultimately, yes.

Senator McKENZIE: I needed that clarified, given your answers.

CHAIR: So you cannot tell us the skill level required and you are not sure if it is a TAFE qualification, but nevertheless you categorically want to tell us that this skill can only be sourced through backpackers?

Mr Onley : What I am saying is that we, as well as many other industries, source these workers who debone meat products, whether it be red meat or white meat, through these entities that we engage.

CHAIR: But you want us to believe that you are doing the right thing. You come here today and, as I just said, you want us to believe that, despite your not knowing the skill level and not being able to tell us how much training is involved, somehow this is a skilled occupation. Yet the committee has had a lot of evidence presented to it by backpackers, particularly Korean backpackers, who come here and work in factories like Baiada for a period of time and then leave.

Mr Onley : I am not quite sure what—

CHAIR: I am sorry. I do not believe that it is such a highly skilled occupation that you cannot find local workers to do boning—that somehow this is some kind of skilled occupation that only backpackers can provide.

Mr Onley : What we do is engage entities that have the necessary skills and personnel to carry out that work. I am not saying it is only backpackers; I am saying what we do is provide—

CHAIR: How do you satisfy yourself that a labour hire company has the skills to go out and source this boner when you cannot tell us what the skills are? How do they know what the skills are when you as the human resources manager cannot tell us what the skills are? How do they know when you do not?

Mr Onley : What we can do is check on the labour supply that is provided to us, to ensure that it meets our standards of productivity and quality.

CHAIR: What is the quality you are looking for?

Mr Onley : We are looking for the bone to be removed from the meat without any foreign contamination, or as per the terms of our SQF requirements.

CHAIR: If that is the only requirement, why can you not get a local worker to do that?

Mr Onley : Our business model is that we have engaged in the past, as do many other industries, an entity that is able to provide that service for us.

Senator McKENZIE: Is it not the case that there is an argument around industry that this particular type of worker has a dexterity advantage?

Mr Onley : Yes, I have heard that.

Senator McKENZIE: Would you argue that this type of worker gives your business a productivity advantage?

Mr Onley : Definitely there is a productivity advantage in the labour supplied by these entities. As I said before, one of the factors is the productivity of the labour supplied for this function and also the quality of the work they perform.

Senator McKENZIE: Given that you can very easily identify for us the productivity gains, and the particular skillset, i.e. the dexterity of this particular group of workers when it comes to boning out a chicken, I do find it very interesting that you cannot answer any of the chair's questions about the skill level and what is required in boning out a chicken—but you are very able to quantify the productivity advantage to the business.

Mr Onley : With regard to whether there is any formal qualification to perform the work they do, the answer is that I am not aware that there is.

CHAIR: Nor are we, but the committee has had evidence from Korean backpackers in particular, who come here as guests in our country for a very limited amount of time and are being employed by your skilled contractors to do boning work. It is like you are trying to pull the wool over our eyes. That is not someone who comes here with a skill to bone chickens. It is not. No matter how you dress it up, it simply is not.

Mr Onley : I have stated before, we engage entities that provide this service to us and also other players within the industry to carry out the functions that we need for our production requirements.

CHAIR: Did you see the exhaustive work that the Fair Work Ombudsman did in relation to the layers of labour hire companies that Baiada had providing workers to them?

Mr Onley : I have read the Fair Work Ombudsman report. The Fair Work Ombudsman has not seen fit to share any further details of those layers with me.

CHAIR: It is a public document.

Mr Onley : As I said, I have read the Fair Work Ombudsman's report.

CHAIR: Have you seen the graph?

Mr Onley : Yes, that was in the Fair Work Ombudsman's report.

CHAIR: Is that an accurate graph of the labour hire structure that was operating at Baiada?

Mr Onley : When these stories were released in May, as part of the Four Corners report, we undertook to—

CHAIR: No, it is not part of the Four Corners report. This was post Four Corners.

Mr Onley : As I said, in May this year, following the Four Corners report, we undertook our own review. As part of our own review, we indicated that one of the concerns was the level of subcontracting. We actually enacted to set new agreements with our contractors that prohibited subcontracting to further layers.

CHAIR: How did you not know about those levels of subcontracting?

Mr Onley : We had systems in place to ensure that the entities we engaged were proper registered entities. We made sure that we paid those entities and we did checks to ensure they were registered with an ABN. We did checks on the directors, we did checks on GST. We did calculations to ensure the work rate that was performed by the employees, and the invoice paid to that contractor was sufficient for them to discharge their obligations under the poultry processing award, under the payroll tax and the Australian tax act, under the workers compensation superannuation conditions.

CHAIR: At the time of the Four Corners program?

Mr Onley : We have for many years conducted checks on all our contractors to make sure that we had systems in place to make sure that they were able to fulfil their obligations under workplace laws.

CHAIR: Did you give that information of these checks you have been carrying out for years to the Fair Work Ombudsman?

Mr Onley : Yes, I did.

CHAIR: How come it took them about 10 months to compile that table of subcontractors, if they had all of your information?

Mr Onley : That is a question you need to ask the Fair Work Ombudsman.

CHAIR: Are you saying you could have drawn up the same subcontracting diagram and given that to the Fair Work Ombudsman?

Mr Onley : No, that is not what I am saying, with respect. What I am saying is we conducted checks of all our contractors and we shared the checks that we conducted with the Fair Work Ombudsman back in 2013.

CHAIR: Is the Fair Work Ombudsman incompetent then, because they were not able to do those checks that you undertook?

Mr Onley : I am making no comment on the capacity of the Fair Work Ombudsman.

CHAIR: Why do you think you could do those checks and the Fair Work Ombudsman could not?

Mr Onley : Following our review in May, we were not aware of the level of subcontracting.

CHAIR: You just told me in evidence that you have done checks on all of the companies that you employed. What is it here? There is a gap here. The Fair Work Ombudsman cannot identify the number of contractors or their directors, some of whom just have a telephone and go out of business the next day, but you have this complete catalogue of all of the directors and all of the subcontractors. There is a big gap in those two stories. Which one is correct?

Mr Onley : I think I need to clarify my evidence. I thought I was quite clear. We engaged an entity to perform that work for us. We carried out checks on that entity to make sure that they were registered as ABNs, to make sure they had registered directors, that they were registered for GST and we did calculations on the work that the employees provided by that entity and that what we paid was sufficient enough for them to discharge their obligation under the laws.

CHAIR: How did you do that when some of those entities did not even employ anyone, if you believe what the Fair Work Ombudsman said, which I am inclined to believe—let me put my bias on the table here? What check did you do to find out head contractor A employed staff? You said you checked the records, and yet when the Fair Work Ombudsman looked at the same contractor, they discovered actually they did not employ anyone, they were just laundering money?

Mr Onley : We have always conducted checks on contractors we engaged to ensure that they are compliant with the requirements of the Commonwealth workplace laws. We conducted checks on that contractor. As a result of our review in May, we realised that those checks were not stringent enough and hence we have made the changes to our agreements.

CHAIR: How many contractors did you find did not employ anyone?

Mr Onley : We asked for information from contractors. We asked for information from the directors of those contractors we engaged prior to May this year, to ensure that they were fulfilling their obligations. We received those assurances from those directors. We also received information from their accountants in some cases.

CHAIR: Can you provide that information to the committee?

Mr Onley : I will take that on notice. I am happy to provide any information—

CHAIR: You spoke to all of the contractors that are on the Fair Work Ombudsman's list of contractors engaged by Baiada, and you ascertained who the directors were and you said that they will employ people?

Mr Onley : I need to clarify this very clearly: with regard to the ones that we engaged, we had information from those directors and from some of those entities' accountants; with regard to the layer of subcontracting, we were not aware of the level of subcontracting of those contractors until our own review in May this year.

Senator RICE: Are you confident that through your review in May you uncovered all of the subcontractors?

Mr Onley : What we have done is we have prohibited subcontracting under our new agreements.

Senator RICE: You have done that for now, but are you confident that, prior to your review, you uncovered all the layers of the subcontractors that were being employed?

Mr Onley : With regard to the prior range of contractors, no, I am not sure of the full extent of subcontracting under the previous agreements.

CHAIR: I find there is a serious credibility gap in your evidence. You cannot have a Fair Work Ombudsman report that sets out a table that shows some of those contractors were simply flowing the money through, and then sit here and tell the committee that you have investigated every one of them. There is a credibility gap here, and I am afraid from my perspective it sits with you. What do you say in relation to a recent report from the Uniting Church that says there are still problems at Baiada in terms of contractors?

Mr Onley : Are you referring to the October report in the Sydney Morning Herald?

CHAIR: Yes.

Mr Onley : With regard to that Uniting Church report, immediately following that report we made calls to the Uniting Church. Our CEO met with the head of the Uniting Church here in Melbourne. We sought information on those alleged underpayments or noncompliances with regard to the three employers mentioned. The Uniting Church has informed us that they are in possession of no information with regard to those employers. Indeed, they are still seeking information if that is the case. We also made further inquiries to the Fair Work Ombudsman with regard to those three employers and the story. All three parties are still seeking information on that. There is no information available regarding those alleged three employers and the mistreatment and underpayments. What I can say is we now have systems in place to ensure that every person working on our site is covered by an electronic timing system, has photo ID, has a visa immigration check to make sure they are legitimately entitled to work in Australia, and we make sure that we make the payments on behalf their employer into that employee's bank account, including the superannuation requirements and taxation requirements.

Senator McKENZIE: Recognising the work Baiada has done, and also noting your comments that it is not your legal requirement to put in place all these processes but you have, what advice do you have for the committee on how can we change the system or make recommendations out of this inquiry so that what occurred at Baiada prior to these changes cannot occur again? What sorts of changes would you recommend, in your experience, that we should be suggesting to government?

Mr Onley : I will answer that indirectly and get back to the point in a roundabout way. We have always engaged entities with a legal right to supply their services in Australia.

Senator McKENZIE: No-one is arguing with that. I want to know how, moving forward, recognising that you are doing this off your own bat, because you are not legally required to do that, you are assuring yourself that from now on hire companies that you use are paying their workers appropriately and legally. What systemic changes do we need to make in order to assure ourselves, and have some integrity throughout the system, that what occurred is not able to occur again?

Mr Onley : That is a matter for the broader Senate committee—

Senator McKENZIE: No, you are uniquely positioned in this debate to provide advice to a government on how to make the system better.

Mr Onley : The government needs to look at the current legislation in place, and if there are opportunities for—

Senator McKENZIE: Where do you think the current legislation needs to change?

Mr Onley : Again, I would need to probably sit down—

Senator McKENZIE: Could you take that on notice? I would like your advice to our committee on some of the things that we can recommend to government that do need to change, so that everyone who is using this type of labour can be assured, without having to go through the hoops that you are now currently having to go through to assure yourself, of the integrity of the system.

Mr Onley : I am more happy to take that on notice. I am more than happy to give a commitment to this committee that I will take it back and have that discussion internally with other members of our organisation and will provide a response back to that.

Senator McKENZIE: I would really appreciate it, because I think Baiada's experience is unique and you might be able to give us assistance in how the law needs to change in a way that others cannot.

Mr Onley : I agree. Rather than an off-the-cuff answer, I am happy to supply you with a considered answer on that one.

Senator McKENZIE: Thank you.

Senator RICE: Following up on that, you obviously felt the need to take on the payroll for your contractors to give yourself the assurance that the workers being employed by those contractors were being paid properly. Would you recommend that to other companies?

Mr Onley : It is a big ask. Indeed, most organisations use some contract entity, whether it is cleaners, gardeners, lawnmowers or boners. Every organisation in Australia will engage a contractor in some capacity to provide work, such as for an electrician to come and change a lightbulb. You need to be mindful of what the requirements would impose on an organisation if they were then going to have to check the credibilities down to the nth degree for every contractor's employee that they are engaging. I will give an example: the High Court of Australia engages a cleaning company to clean the High Court. For the High Court to then have to do checks on whether the contractor is paying their employees into the account and then doing those checks themselves would make it a very complicated system. Hence, I am happy to come back to Senator McKenzie's request and build that in the response.

Senator RICE: Given that it adds to that complexity, why did you feel it necessary to take on that role yourself?

Mr Onley : It is our commitment that we see this as a serious issue. It is a serious issue and we have taken it up. Our CEO has given a mandate, the border directors have given a mandate, that we want to be in a position where we can assure ourselves that Baiada as an organisation is only dealing with those entities that are acting lawfully and ethically as part of our growth in the ethical sourcing policy that we are putting into place.

Senator RICE: What is it costing you to provide the payroll services?

Mr Onley : I cannot give an exact figure. I am happy to take that on notice, but, roughly, we have employed four or five more individuals to help us run the payroll systems. We have invested heavily in biometrics. Rather than an ID card that has a photo on it, we are using fingerprint biometric technology in some of our processing plants. We have certainly engaged consultants to do the review of the audits. The management time that we have thrown into this is quite considerable. We have some training requirements with regard to management and supervisor training going forward that we have committed to. I cannot give you an exact dollar figure, but I am happy to take that on notice.

Senator RICE: I presume that those payroll costs are being charged back to the contractors or are you paying them less? How does it work?

Mr Onley : With regard to the outsourcing of payrolls, we have entered into specific payroll agreements with those entities. There is a fee for that service, but I can guarantee that Baiada is actually losing money on that, but it is part of our commitment to ensure that workers are paid right. That is part of our business model going forward.

Senator RICE: How many entities are we talking about?

Mr Onley : Eight, I think. I should know the number off the top of my head.

Senator RICE: Could you take that on notice?

Mr Onley : There are eight entities. I am happy to give the names and contact details to the committee of all the entities being engaged. That is not a problem.

Senator RICE: I wanted to ask about the proactive compliance deed. The AMIEU told the committee in June this year that they had been collecting evidence of exploitation of 417 Visa workers for the last 3½ years and they gave evidence to the Fair Work Ombudsman that Pham Poultry and NTD Poultry, both of which provided workers to Baiada, owed $434,000 to 32 visa workers and $134,000 to 20 visa workers respectively. Your proactive compliance deed set aside $500,000 to reimburse underpaid workers, which of course is less already than those two figures. I have got two questions: I understand the scheme does not deal with underpayments that occurred prior to 1 January, so why doesn't it do that; and secondly, why is the amount limited to $500,000, given that it seems that that is not going to be sufficient?

Mr Onley : I am happy to answer that question. In consultation with the Fair Work Ombudsman, we went through what our obligations are to contractors and employees. The Fair Work Ombudsman has agreed with Baiada that $500,000 for claims post-January 1 is a sufficient amount to cover those claims.

Senator RICE: Why is it only limited to claims post-1 January, given that there has been evidence of exploitation for 3½ years or more?

Mr Onley : Again, I will make it clear: Baiada has not been party to any exploitation of workers.

Senator RICE: Your contractors and the subcontractors that you do not know even who they are—you have been party to them.

Mr Onley : We had systems in place—we have always had systems in place—to make sure the contractors we engaged are legally entitled to work in Australia. They are legal entities, and we carried out checks on those entities. As part of our review in May, we realised our systems were not stringent enough for those third parties we engaged. We went through the process of improving our systems to make them more stringent. We have now got photo ID. We have now got—

Senator RICE: Yes, you have presented a lot of evidence about what you are doing from here onwards. I am wanting to go back to actually getting some recompense for the workers that have been underpaid with poor conditions prior to that. We have got the AMIEU providing evidence of underpayment that adds up to $568,000 already and, like other evidence that we have heard, there are probably many workers that have not put in claims. Why is the scheme limited to $500,000 and why doesn't it look at the underpayment prior to 1 January?

Mr Onley : We have entered into an agreement with the Fair Work Ombudsman. The proactive compliance deed—the scope, the deed and the dates for that agreement—was what we have agreed with the Fair Work Ombudsman as the regulator that is responsible for overseeing workplace regulations. We have entered into that agreement.

Senator O'NEILL: Is that the best they thought they could get, Mr Onley?

Mr Onley : With respect to that, if there is any evidence of any claims with regard to underpayment to any workers, I am more than happy to take that information and deal with it under the proactive compliance deed and in consultation with the Fair Work Ombudsman.

Senator RICE: Given it is limited to $500,000 and there are existing claims that already seem to be adding up to more than $500,000, will you pay out those claims if you get claims of over that $500,000?

Mr Onley : With regard to our obligations, those obligations are clearly stated in the deed. The terms of the deed and the obligations of Baiada in the deed are very clear. As from January 1 this year, we are liable for any underpayment of workers up to $500,000.

Senator RICE: What is going to happen to those claims before 1 January?

Mr Onley : As I said, I am more than happy, if the senator or the union want to provide that information to me or to the Fair Work Ombudsman to sit, cooperate and collaborate with the Fair Work Ombudsman on those matters.

Senator O'NEILL: In the deed, on the first page in C, it says:

Prior to November 2013, the Fair Work Ombudsman (FWO) received requests for assistance from contract workers at Baiada’s Beresfield plant alleging that they were being underpaid by their contractor employer, forced to work extremely long hours, and required to pay high rents for overcrowded and unsafe employee accommodation.

Clearly, there is already evidence with the Fair Work Ombudsman that this was occurring before 2013. It is in the deed. So why is the date set at 1 January this year and ignoring those workers?

Mr Onley : Again, the Fair Work Ombudsman in his capacity as the regulator has entered into the deed and has determined that from 1 January this year—

Senator RICE: So bad luck to those other workers?

Senator McKENZIE: So we take it up with the Fair Work Ombudsman, do we?

Mr Onley : No. I am happy, if there are any claims prior to 1 January this year, to take that information on board. I give the commitment that I will do the best I can with any capacity I have to investigate those claims and, in consultation with the Fair Work Ombudsman, provide that information and work through it with the Fair Work Ombudsman.

Senator McKENZIE: Good on you.

Senator RICE: In terms of further claims, what work is Baiada doing to encourage further people who may have been underpaid—those sorts of claims—prior to or since 1 January 2015 to come forward?

Mr Onley : They are clearly outlined in the proactive compliance deed, but I will go through some of the steps we have put in place for any person who may want to make a claim. We have published a public notice in the Weekend Australian. I think it was a week and a half ago.

Senator McKENZIE: Sure, that is exactly where people would be looking.

CHAIR: It is where I would look.

Senator McKENZIE: You are not a backpacker.

Mr Onley : Again, I will go through all the steps that we have put in place. A requirement under the deed is for us to advertise a notice in the workplace where all those contract workers are working and to establish a hotline. We have established a third-party hotline whereby any worker who wants to make an inquiry or a complaint or believes they have a claim for underpayment can call or email that hotline with information so that we can investigate those claims and follow them through.

Senator RICE: How many calls or emails have you received so far to that hotline?

Mr Onley : I cannot give you an exact number. I am happy to take that on notice. I think we have had around 10 claims that fall under the deed. That is a rough figure. I say that without referring to the actual information on each of the calls.

Senator McKENZIE: Are you advertising outside Australia as well?

Mr Onley : With regard to that, the requirement under the deed is for us to advertise on any Australia based website that was used for the recruitment of workers. Again, we have made enquiries of the Fair Work Ombudsman; we have made enquiries of the unions, the AMIEU and the NUW; and we have made enquiries of all our contractors about what websites they have used. At this moment, no-one has been able to provide us with a website that is used for the recruitment of workers. If this committee has any information with regard to any Australia based website that can do that, I am more than happy to take it on board and advertise in accordance with the deed.

Senator RICE: So at the moment you are not advertising on any websites that are likely to be seen by former workers outside Australia—for example on Korean backpacker websites or something, given what we have heard of your likely Korean backpacker workforce in the past?

Mr Onley : We will advertise on any website in accordance with the deed—that is, any Australia based website that is used for the recruitment of workers for the provision of labour supply at Baiada. We are required to do that, and we will do that.

Senator RICE: What about any other websites that are not being used for the provision of workers? You advertised in the Weekend Australian.

Mr Onley : If this committee has any information regarding websites where workers are being sourced to supply labour to Baiada, I am more than happy to take that information from the senator and follow through with it, in consultation with the Fair Work Ombudsman.

Senator RICE: Is the proactive compliance deed a legally enforceable document?

Mr Onley : I believe that it is.

CHAIR: Can you give us a copy of the ad that you put in the Weekend Australian?

Mr Onley : I am happy to take that on notice and provide it to the committee, yes. I am also prepared to provide you with a copy of information on the hotline, if that would help the committee.

CHAIR: I am just interested in the ad.

Senator O'NEILL: The proactive compliance deed is a legally binding document, you just said. Could it also be called an enforceable undertaking?

Mr Onley : I do not believe so. I think the term 'enforceable undertaking' in terms of the Fair Work Ombudsman—there is actually a requirement for enforceable undertaking as a separate process and a separate document.

Senator O'NEILL: I have not seen one of these before. Have you seen one of these before?

Mr Onley : The first I heard about it was in our meeting with the Fair Work Ombudsman. I did some research, and they have been issued by the Fair Work Ombudsman in the past.

Senator O'NEILL: And they differ from the enforceable undertaking, in your view?

Mr Onley : I believe so, yes.

Senator O'NEILL: I have another question with regard to ongoing interactions with the unions: the NUW and the AMIEU. Have you got a hotline for them to contact you on now?

Mr Onley : With regard to the unions, we have an open dialogue with the NUW and the AMIEU. I am holding meetings at both a national and a state level directly with those organisations—Grant Courtney from the AMIEU, Chris Clark from AMIEU's southern division, and NUW's Alex Snowball; I have met with Alex again this week. We have given information on the hotline and the process we are going through, and I have encouraged them to use that process to give us the information on any claims that they may have or their members may have.

Senator O'NEILL: Going forward, how quickly can they contact you and get a resolution of matters?

Mr Onley : They can contact me straight away. There are some requirements in the deed. Within 28 days I am required to report back to the Fair Work Ombudsman. I have given a commitment to the unions that I will report back to them immediately, at the same time as I report to the Fair Work Ombudsman.

Senator O'NEILL: One of the points that was made in a number of the hearings—and I certainly have heard this when I have been in regional New South Wales—is the process through the plants starts at just basic labouring level, but the goal is to get to the boning room, because that is where the rate of pay is higher. Is that a correct understanding?

Mr Onley : It is probably not my understanding. I know that in May this year we did have people who were doing processing functions as opposed to boning functions. As a part of our review, we have moved away from that and we have no contractors doing packing and tray pack work anymore.

Senator O'NEILL: Why is that?

Mr Onley : We have looked at our model and we have utilised our other labour hire organisations to fill that gap. It does not have the same skill level as the boning component of the operation.

Senator O'NEILL: The skill level—according to my recollection of evidence given in Brisbane, in Melbourne and in Adelaide, and based on your evidence today—is something that can be taught to people who are learning in a foreign language and in a brand new context in Australia, so I am assuming the skill level is not that significant, but nonetheless there is a differentiation between the pay that people get when they are doing packing and moving things, and a higher rate of pay in boning. Is that the case?

Mr Onley : Yes. The award has two classifications. There is an induction level, which is level 1; there is a level 3, which covers most the processing functions like packing of chickens, packing of tray packs; and there is a level 5, which involves the process of both boning and filleting. It is clearly documented in the award.

Senator O'NEILL: Just to be clear, what percentage of the workforce in the boning part did you say this afternoon is done by full-time employees?

Mr Onley : Full-time employees or contractors?

Senator O'NEILL: Full-time employees.

Mr Onley : I will answer it in reverse. The majority of boning in our operations is done by contract employees.

Senator O'NEILL: What percentage? What split?

Senator McKENZIE: He said upwards of 90.

Mr Onley : In the nineties.

Senator McKENZIE: That was earlier.

Mr Onley : The majority.

Senator O'NEILL: Can I raise concerns then that they sound like they still are evident in your practices? Local people who might want to work at Baiada somewhere in regional New South Wales go to the workplace with some expectation that they might be able to advance to a higher level of pay and develop some skill—even if it is a reasonably easy-to-teach skill, because it is being taught to backpackers—but the block is happening for them that they cannot get off the floor and into the boning room, because your practices mean that you are employing overseas backpackers, who you train on a rotating basis, to take those higher paid jobs.

Mr Onley : Can I have the question again?

Senator O'NEILL: There is no job progress. There is no advancement for local people who get in. They are on the lower wage.

Senator McKENZIE: With respect, Senator, it is a long bow—

Senator O'NEILL: Hey!

Senator McKENZIE: and it drawn all the time, but I tell you what—

Senator O'NEILL: This is reported to me, Senator.

Senator McKENZIE: you put that ad in your local regional paper, and you will not find a local applying!

Senator O'NEILL: Maybe you do not talk to the same people that I talk to, but the reality is that this is what is going on!

CHAIR: Order! We have all had a fair go. Senator O'Neill is speaking.

Senator O'NEILL: I have been very quietly waiting for my turn. This is what people are telling me that happens. Young kids and people returning to work, they go to Baiada, they get in, they get a job and they cannot get off the floor in terms of moving product. They cannot get into the boning room because of your employment processes.

Mr Onley : I have met personally with the union. I have met personally with Grant Courtney, being the secretary of the Newcastle & Northern Branch of the AMIEU. I am holding ongoing discussions with Grant in this matter. We have, in consultation with Grant, worked collaboratively to offer local workers opportunities at our plants. I would be happy if the committee wanted to approach Mr Courtney on that. I have entered into those programs with Grant. We are currently having discussions about the capacity for boning under our enterprise agreements. We are in that process of discussion, in the consultation with the unions, related to that—to our enterprise.

CHAIR: We will leave it there. Thanks very much for coming today, Mr Onley.

Mr Onley : I thank the committee for allowing me to talk.