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Education and Employment Legislation Committee
Fair Work Ombudsman

Fair Work Ombudsman


CHAIR: We now have representatives from the Fair Work Ombudsman. I welcome Ms Parker, the Fair Work Ombudsman. Do you wish to make an opening statement?

Ms Parker : No, I don't.

CHAIR: Excellent.

Senator WALSH: Ms Parker, your annual report shows that the Fair Work Ombudsman has recovered the highest amount of underpaid wages on record—over $40 million for almost 18,000 workers. That's a fantastic result for those workers, and it is a reflection of the Fair Work Ombudsman's work. There are reports that about one in five Australian workers may be underpaid. Certainly, we know that underpayment or wage theft is higher in some industries than in others—industries like hospitality, horticulture and so on. Do you have any ability to give an estimate of what the rate of underpayment is across the country as a whole? If not, from your work, would you agree that this amount of money, while really significant, and this number of workers is probably the tip of the iceberg in relation to underpayment?

Ms Parker : Thank you for the question. We can't say what the figure is, and it would be great if we could say. What we do as an agency, as you will see from our annual report, is that with the resources we have we prioritise. We prioritise the effort we put in on the basis of requests for assistance that come in to us and intelligence that we gather through research and through working with stakeholders. We look at a whole range of other things. Reporting, media and a lot of other information gets put together. We've announced for the first time annual priorities on that basis. There are a number of industries—such as fast food, restaurants and cafe sectors, Harvest Trail and other areas—that we have concerns with. It's those that we focus our discretionary effort on, if you want to call it that, and they are industries and sectors where we get significantly more requests for assistance and more issues are raised with us, including through media and others as well. When we audit in those areas, we do it on the basis of intelligence. We don't do random audits. So, when you come up with a figure that says, 'We did these audits and there was 50 per cent noncompliance,' you do need to take account of the fact that it's not random, so you can't actually extrapolate that across the whole of Australia. What you can say is that, in the areas we've gone after because we had concerns, there was 50 per cent noncompliance. That shows that we're probably targeting quite well when we do audits, because we are finding noncompliance in areas we were expecting it in.

Senator WALSH: So you're not able to give an estimate of what the rate of underpayment is, but there's obviously a lot of evidence of underpayment out there in the community, and you've found a lot of it. What are some of the factors that limit your ability to deal with more incidents of underpayment and to recover more money?

Ms Parker : We have a range of functions. A large part of our function is education and assistance, and responding to inquiries and requests for assistance. We also have a promotion and education role. So a lot of the work we do is not just about compliance and going out and enforcing the law. A lot of the work that staff in the Fair Work Ombudsman do is to educate people about their rights and entitlements and also to educate employers about what they should actually be providing to workers. It's important to remember that function is quite a significant part of our work, so I'd say we play a very large prevention role.

In terms of our ability to then enforce, we enforce based on what we find through the audits that we target. As I said, we do that on the basis of risk. So we do quite an extensive risk assessment based on all the things I mentioned before, and we determine annually what we're going to focus on. We do a business plan—basically a program of work for the year. That involves a whole range of audits in a whole range of areas—some of them announced, some of them unannounced. I suppose that like any regulator, if we had more resources, we could do more audits. If we had more resources, we could do more education. But we work with what the parliament has given us, and I think we do that, as I said, very much through a risk based approach. I think we're getting much better at that in terms of really homing in on the areas. The areas we home in on are the ones I mentioned, but we also, as has already been mentioned in previous discussions today, look for areas where there are vulnerable workers, such as migrant workers and young people, where there are people who are less likely to be represented by unions and where we know people will be wanting our help. That's where we put our efforts.

Senator WALSH: If we have time we may come back to some of these questions about resourcing and priorities. Can I turn your attention to the sham contracting unit, which was provided for in the government's 2019-20 budget. I understand the Fair Work Ombudsman will receive $9.2 million to establish a sham contracting unit and that the money was to start flowing to you from 1 July. Has the sham contracting unit begun its work?

Ms Parker : Correct, Senator. We received $9.8 million over the forward estimates to establish a dedicated sham contracting unit. Its role is education, compliance and enforcement. That unit has been established. We have inspectors responding to requests for assistance, undertaking proactive activities relating to sham contracting and, of course, it's one of our priorities. It's one of our 2019-20 compliance enforcement focuses. I will say that in the past five years we've achieved over $2.3 million in court-ordered penalties against businesses that have been found to be sham contracting. We've recovered around $631,000 for 140 workers affected by sham contracting. But there's plenty more to do. That's what the funding is there to do.

Senator WALSH: I'm after a bit of specific information, if you've got it at this stage, about the progress of the sham contracting unit in its very early days. I wonder if you know and if you can advise the committee at this point how many people will be working within the unit and in what types of roles?

Ms Parker : Mr Campbell will answer that. He is responsible for the unit.

Mr Campbell : The sham contracting unit has been set up. It commenced operations on 1 July. There have been 10 new officers appointed to different roles within the sham contracting unit. They are part of a broader compliance and enforcement branch within the operations group. The staff are based largely in east coast offices. They've designed a program of work, which they will be executing over the course of the next 12 months. As Ms Parker pointed out, we have some experience in this space, so the additional resources will help us to expand and, I suppose, increase and improve the number of compliance enforcement outcomes that we are capable of doing.

Senator WALSH: You have 10 people on board in compliance roles?

Mr Campbell : Yes.

Senator WALSH: Will they be out and about in workplaces doing inspections—

Mr Campbell : Absolutely, as part of the broader inspectorate. As the Fair Work Ombudsman, this unit will operate with a focus on sham contracting. It is led by an assistant director and has two senior team leaders and then operational staff underneath that—all Fair Work inspectors, all carrying workloads. As Ms Parker identified, our model includes both a responsive aspect, in that we will respond to complaints about sham contracting, but equally we will design and execute targeted work, where we have concerns about instances of sham contracting.

Senator WALSH: The 10 officers who are focused on sham contracting and are going to be doing visits and audits, are they out and about and doing that yet?

Mr Campbell : Yes, absolutely. Those appointed to these roles are all experienced operators. We have brought in some new people from other backgrounds, but, largely, we've got people who are trained and experienced Fair Work inspectors, knowledgeable about the Fair Work Act and sham contracting law.

Senator WALSH: Have you yet identified any employers for action by the unit?

Mr Campbell : Yes. We have a number of active lines of inquiry into different employers with whom we have some concerns that they might be engaging in sham contracting. As Ms Parker pointed out, we have a very active litigation practice that involves sham contracting matters, as well. Last year we had some success in bringing litigations to a conclusion and having significant penalties imposed by the courts. So, it is a very active enforcement unit.

Senator WALSH: What are your priority industries?

Mr Campbell : We'll be targeting a number of different industries, but where we previously have seen instances of sham contracting is in cleaning, transport, the construction sector and security. That's not to say they're the only industries. They're industries where we have concerns that, certainly, misclassification of workers and ultimately sham contracting does occur.

Senator SHELDON: I want take you to a matter which has been dealt with by the Fair Work Ombudsman, about the Escarpment Group, which owns Lilianfels and Echoes in Katoomba, the Hydro Majestic in Medlow Bath, the Parklands Country Garden and Lodges in Blackheath and the Convent Hunter Valley. Could you tell me if you're aware of where that investigation might be up to with Escarpment?

Ms Parker : I probably can't provide detail, but we can say it's still under active investigation.

Senator SHELDON: I have another question regarding job advertisements—a separate matter. You may be aware of allegations of job advertisements in newspapers—both the English-language press and the migrant press—that advertise amounts that are illegal wages. Does the Fair Work Ombudsman do an analysis of those adverts, does it investigate those adverts and does it take action as a result of those adverts? What are its powers to do that?

Ms Parker : I think the Migrant Workers Taskforce recommended that that be specifically prohibited, and we supported that at the time when we were on the Migrant Workers Taskforce. In terms of responding, it would be a request for assistance, I imagine. We don't scan newspapers or look for it. But, if someone brought it to the attention of the Fair Work Ombudsman, we would look into that. It depends on the issue. Part of it could simply be to say to the employer, 'Fix it.' But, if we get complaints that they're actually paying less than that, it would go into the normal track of finding out what's happened and trying to rectify that.

Senator SHELDON: There was a report by Unions NSW released in July 2017, Lighting up the black market: enforcing minimum wages, and it found that 78 per cent of positions are advertised with unlawful wage rates on Chinese-, Korean- and Spanish-language websites. I appreciate you've made submissions regarding the department's concern about this activity as well.

Unions NSW also released a report in December 2018, Wage thieves: enforcing minimum wages, which said that, in other-than-English-language newspapers, 70 per cent were advertising illegal amounts. Also, on the matter of English-language advertising—I'm in the hands of the chair with regard to this—there are two examples that I have of adverts for truck drivers, requesting HR truck driver numbers, on a Jora Australia website. Please take this on notice.

Ms Parker : Okay.

Senator SHELDON: QLS Logistics in Berrinba say that they'll pay a truck driver $300 plus GST day rate if they work from five to six days long, guaranteed each week. It goes on to talk about their work arrangement. However, they have to have an ABN number. There's another example, on SEEK, of an MC truck driver requested at a company called Semmens Transport from Brisbane. It is also offering 38 to 70 hours per week, immediate starts. The job is full-time hours but a casual position. That is a question about correct classification of payments. I'm not suggesting this is a proper or improper way to approach these issues—not regarding those two examples; I have serious concerns about them—but I note in the case of welfare recipients that the government has a policy of robo-debt. If that policy were applied in a similar fashion to migrant workers that have been ripped off under their visa arrangements, maybe more humanely, if that were applied automatically when you were checking immigration employment contracts and tax department responses, and correlating that to potential for wage theft, what would be the potential consequences of that?

Ms Parker : These things that you read out are completely unacceptable, obviously. We're happy to take those and look at those. What I will say is that we do work closely with the tax office and Home Affairs. There is ongoing work with them. We refer to each other, we alert each other. We regularly share information where we can where there are related issues. There often are related issues: if a worker is being underpaid, often tax isn't being paid, superannuation isn't being paid and all the other things that go with it. We have pretty good relations with our colleagues on these issues. Yes, this is going on and it is a real problem. Employers need to find out what they should be required to pay and they should be paying it.

Senator CICCONE: I have a few questions with respect to overseas worker policy. I understand that there were some recommendations that came out of the Fels report?

Ms Parker : Yes.

Senator CICCONE: I just wanted to get some clarity about the report. It talks about some responsibilities between the Fair Work Ombudsman and the Australian Border Force. Would you be able to explain the different roles that your agency has and ABF?

Ms Parker : Are you referring to the assurance protocol or more broadly on that one?

Senator CICCONE: More broadly. There were some recommendations that came out of the Fels report, and I think one of the major considerations was about the interrelation between the two agencies.

Mr Campbell : I suppose the simplest delineation between the work is that where there's a workplace entitlement that can be pointed to that is derived from either an industrial instrument or the Fair Work Act and it involves a visa worker, then it is our jurisdiction. When there is a work entitlement that is derived from the visa itself, such as the old 457 visa, for example, the enforcement of that wage rate would sit with Border Force. Largely the work of our inspectorate with regard to visa workers goes to award entitlements and minimum wage entitlements under Fair Work Act. So if there is a visa breach, for example, if an employer has taken action against a visa holder because of their visa right, then Border Force would look to enforce that under the Migration Act; whereas the underpayment aspect would sit with us.

Senator CICCONE: In the report it talks about the need for 'a much stronger enforcement response'. Is that enforcement in what sense—from the Fair Work Ombudsman or from the ABF?

Ms Parker : I think it refers to both. In the taskforce there was discussion about how we can jointly do more of that. For example, we would like to see more cases where, if employers who are found to be underpaying we'd like to be able to say to immigration that they shouldn't be employing workers, really. These things are not always in our gift, but we certainly share information with each other.

Senator CICCONE: Since that report have you conducted any review into where you can make improvements in terms of how you enforce current procedures and policies?

Ms Parker : Professor Fels, at the time, was of the view that—obviously migrant workers was the focus. He was of the view that there was significant underpayment going on with migrant workers. The taskforce was of the same view. We have prioritised migrant workers as part of our forward work, if you like. They are one of the highest priority areas for us. So we have responded to that. We have reviewed our compliance and enforcement policy after the taskforce reported. It's fair to say that we're toughening up our approach. We'll be using more instant, immediate improvement notices. In a range of ways we're taking a view that we need to act more quickly and we need to put it onto the employer to make good on underpayment. With migrant workers there's a whole range of things we're doing there. In addition to migrant workers as a cohort, we've got sectors—harvest trail, fast-food, restaurants and cafes, where we know there are a whole lot of migrant workers. So we're doing it in a couple of different ways—migrant workers as a whole and then sectors where they're likely to be concentrated. We're honing in on those.

Senator CICCONE: How confident are you that the agency has the capacity and the resources to implement and oversee the measures that have been recommended by the Fels report?

Ms Parker : We're making a good stab at it. We certainly think that focusing the way we've done, putting our resources where we have, and making it a high priority is doing a pretty good job. We can always improve. We'll keep on working on that and keep on improving

Senator CICCONE: Have you asked government for additional funding or resources?

Ms Parker : No, we haven't. The government has provided additional funding. We've also been given new powers under protecting vulnerable workers legislation. We have 11 matters that we're taking before the courts using those amendments. We welcome those. They're very welcome. They will allow us to get better outcomes for migrant workers. But, no, we haven't specifically asked for additional resources.

Senator CICCONE: It's all well and good to have extra powers, but if you haven't got the resources to back it up, how can you enforce the very laws that you've been asked to enforce?

Ms Parker : The government has provided us with additional resources. We've just spoken before about the sham contracting unit and funding for that. There is an expectation of labour hire registration. We know that labour hire does attract vulnerable workers, migrant workers again. That will go some way towards assisting. We will continue to target this area.

Senator CICCONE: Has the Ombudsman's Office had to cut any programs or any other resourcings internally to fund the important work you've just outlined?

Ms Parker : No, we haven't had to cut any programs. As I said before, we have a large education and communication response. We have a very large call centre. We have a website. There is a lot of information on our website. We maintain that. We do lots of back and forth with workers and employers via that website. That's a lot of our work. That's our discretionary work. We can decide where to put our efforts year to year. We review that year to year. If something comes up we can put additional efforts into that as well. We do have some flexibility in where we put our efforts.

Senator GREEN: Talking about migrant workers and cafes and targeting those sections, there has been a report today that a Brisbane cafe has been accused of paying its staff with food instead of money. You've been quoted in that article. Can you tell me just a little bit more about that case and how much money you expect the underpayment to be?

Ms Parker : As you said, it's 11 employees at the Cafe 63 Chermside. They were paid in meals, desserts and drinks between August 2017 and January 2018. Those were visa holders. Seven juniors under 21 were cooks, kitchen attendants and food and beverage attendants. I should clarify that they weren't only paid in meals, desserts and drinks. They were given some wages as well. But it is not lawful to be paid in anything other than money. You've asked me how much they were underpaid overall. We've only commenced legal action, by the way, so these are allegations. They are facing penalties of up to $63,000 per breach, and, potentially, the owners, maximum penalties per breach of up to $12,600. In this case we're seeking an independent audit of their wage payment practices and we are hoping for courses for employers as well. But as I said, these are allegations at this stage. We haven't completed the matter.

Senator GREEN: They are pretty shocking allegations As you know, Brisbane was one of the hotbeds of the 7-Eleven case and the exploitation of migrant workers there. Are there any changes that we need to make to help you do that work, so we don't have a repeat? 7-Eleven happened in 2015, and this is still happening now with these particular migrant workers. I know it is an allegation, but this seems to be continued behaviour. Is it a Brisbane issue or is it just this type of work that we are talking about?

Ms Parker : This is an issue that used to be common practice. People would be given payment in a whole range of different ways. In some cases, we find that it is pure ignorance. They think it is acceptable. The food is good and you should be—

Senator GREEN: From the employers or the employees?

Ms Parker : Sometimes the employees think it's fine. Other times, the employer thinks it is fine and is ignorant about it. So part of our role is education. But in this case our view is this is deliberate and they should know better. Therefore we are taking the matter to court.

Senator GREEN: In the report it says that you were alivened to the case after hearing allegations. Where did the report of allegations come from? Was it the employees themselves or another party? Are you able to tell me that?

Ms Parker : Mostly it is the employee. One of the things that came up earlier, I think with the ABCC, is that we have a line that is anonymous that workers can call in without saying who it is and just alert us. That means that when we do go and investigate there doesn't have to be any mention of which worker or any worker. It can be seen as popping in randomly.

Senator GREEN: Do you know if that is what happened in this case?

Ms Parker : I am not sure. We can take it on notice. I am not sure who reported it.

Senator PRATT: In terms of how the Ombudsman deals with unpaid superannuation guarantee contributions, in 2017 the ATO said in its submission to the Senate Economics References Committee, 'Assuming that employees are promptly informed and are willing to take action there are limited avenues for them to directly pursue the matter of unpaid superannuation guarantee contributions.' They can inform the ATO, who are empowered to take action, and then the question is whether this law should change so employees have better direct access to avenues of redress. It was also noted that this is problematic, as they often do not have the resources and funds to pursue the matter. So, given the size of those problems, what is the Ombudsman's view on whether employees should be given better access to direct avenues of redress?

Mr Campbell : Without looking to comment on the commentary in that report, what is probably important for me to do is talk about our role with regard to superannuation guarantee. We as an agency aren't the primary regulator responsible for enforcement of superannuation entitlements. That sits with the tax office. They have very capable recovery functionality. They recover a significant amount of money each year. Our role tends to be focused on where an award—and that's very rare—or a collective agreement provides for an entitlement to superannuation. That therefore becomes enforceable—

Senator PRATT: I'm not trying to conflate the two issues. What I'm trying to look at is the size of reported wage theft. You have obvious limitations on your resources. Who are the other regulators who play a role in ensuring workers are properly paid? The ATO has a role in relation to superannuation, but should we be using the ATO more broadly because of the limits of your resources, for example? What steps do you take to coordinate with other regulators?

Ms Parker : We do work closely with the others, as I said. One thing that might be of interest is that, when a court enforceable undertaking is accepted by this agency, one of the requirements in that is usually for them to pay back what they owe plus interest. That flows on, of course, to superannuation, and we would check that as well. So part of the requirement of that is that superannuation that has been foregone because they've been undergone is paid as part of the deal they have to do with us through the court enforceable undertaking. So we do have a role there and we do, obviously, refer matters to tax when we find underpayments through audits and inspections and requests for assistance.

Senator PRATT: Okay. In that context, when did you first realise that there was a problem with your reliance on enforceable undertakings under section 715 of the act? I note you do now use compliance notices under section 716 more.

Ms Parker : I'll give you some context. In the Migrant Workers Taskforce, of which we were a member participant, Professor Fels identified that we had the power to issue compliance notices and that we were, in his view, taking a conservative approach to that. So, when I started in the agency, I commissioned a review of our compliance and enforcement policy, including our use of compliance notices. As a result of that review, it was recommended to me that we had been too conservative in our use of compliance notices and that was slowing up our investigation. Just briefly, what was happening was the inspectors were concerned they had to determine what the underpayment was. They had to calculate it and decide on every dollar exactly how much had been underpaid. Our interpretation post the review is that we don't have to do that; the onus is actually on the employer to do that, and it's the roll of the regulator to be satisfied with how they have determined what the underpayment is. So a notice is now issued and we oversight that. They have to satisfy us that they have determined and have paid back the money owed. That's it. So we have addressed that issue.

Senator PRATT: I note that Senator Cameron first raised issues with the Fair Work Ombudsman, which is on record from previous estimates, about the use of enforceable undertakings.

Ms Parker : That's a different tool.

Senator PRATT: It is a different tool. When did he first raise that issue? We did have some questions about enforceable undertakings as well.

Ms Parker : I'm happy to talk about those.

Senator PRATT: Do you recall how long ago it was that the issues with enforceable undertakings were raised?

Ms Parker : My recollection is that he has a predisposition to litigation.

Senator PRATT: Okay. Are you still using enforceable undertakings, and could you provide us details of how many undertakings were recovered and the total amount of underpaid wages?

Ms Parker : Yes. We absolutely are still using court enforceable undertakings. They're a very important tool, and we have signed up some very large ones recently, including MAdE, which you'll be aware of. I mentioned before that we take a risk based approach to compliance and enforcement. A risk based approach means that you reserve litigation for your larger cases, where there are significant issues and where you want to create a significant deterrent, or where there has been significant underpayment. We do use them, absolutely.

Senator PRATT: Could I have the total amount of underpaid wages and for how many you did not recover the total amount of underpayment?

Ms Parker : With the enforceable undertakings, unless they breach the undertaking, the total is repaid. If they don't repay then we will litigate, because they would have breached the court enforceable undertaking if they didn't pay back every dollar that we have determined they owe. In terms of the number—was it the number of enforceable undertakings or was it the amounts recovered?

Senator PRATT: How many undertakings recovered the total amount of underpaid wages?

Mr Campbell : We executed 17 enforceable undertakings last financial year. I don't have the total recoveries under those enforceable undertakings. I could get that for you.

Senator PRATT: Thank you. I know Senator Walsh has questions that are relevant to this, so with the indulgence of the chair I will hand to her.

Senator WALSH: I'd like to ask you, Ms Parker, about the enforceable undertakings in relation to George Calombaris and MAdE Establishment Group. As you know and we now all know, George Calombaris underpaid his staff by $7.8 million in wages, and paid a contrition payment of just $200,000 for that repeated and systematic wage theft. That came after he also entered into an enforceable undertaking in relation to the Press Club in 2015.

Ms Parker : No, not an enforceable undertaking. He didn't enter into one earlier. The first one was the one we've just done.

Senator WALSH: Can you tell me what action was taken against George Calombaris in relation to the Press Club in 2015? I think he was warned and required to do annual reconciliation checks of his employees' salary arrangements.

Mr Campbell : We had previously undertaken investigation with regard to one individual working at Press Club where we had identified contraventions of annualised salary arrangements. That was resolved voluntarily with the company. We advised them that they need to take steps to ensure that annual reconciliations of annualised salary arrangements are conducted. Mr Calombaris at the time made a commitment to do so. It is obviously apparent that he failed to act on that commitment. As a result of that, he and then his business and the people that took responsibility for that business underpaid a large number of employees, which then saw our investigation take place and, therefore, an enforceable undertaking was executed at the conclusion of that and saw the recovery of $7.8 million for workers who had been underpaid.

Senator WALSH: Ms Parker, I'm sure you're aware that there has been some commentary about the amount of the contrition payment, $200,000, in relation to the $7.8 million in underpaid wages. How does this relatively small sum create a lesson or disincentive for other employers who may now see wage underpayment as part of their business model and contrition payments like that as simply just a cost of doing business?

Ms Parker : In using court enforceable undertakings, we consider a whole range of factors. One of those factors is what's appropriate. I will go straight to the contrition payment, because that was obviously a consideration. I will say that they aren't fines. They are recognition that the company got it wrong and is sorry. There are a whole range of things we take into account, so we do use a case-by-case approach to these. A key one is the attitude of the company. Whether it came to us and told us what it had done—self-disclosure is obviously a far better thing for us than if we find out through an investigation or through a worker coming forward and telling us. Then it is how they behave: how open were they about it, whether the workers affected were vulnerable or more impacted by the underpayment, whether the company fully cooperates with the Fair Work Ombudsman and with unions if they are in the picture, whether we think they've made a mistake or they were deliberately blind to their obligations and whether they are resisting our requirements.

A key requirement that we have introduced in the last six months or so, perhaps longer, is a requirement for every company that signs up to a court enforceable undertaking to be subject to external audits that they pay for. We don't think it's up to the taxpayer to fund that, and we don't think it's up to us to have to do the assessment. They need to get a third-party auditor that we oversee. The third-party auditor's role is to check the methodology they're using to figure out exactly how much underpayment there is and whether there's any other that they haven't identified. That's what happened with MadE; they started—

Senator WALSH: I'll respectfully interrupt you there. You're going into the factors that led you to decide on an enforceable undertaking and arrive at this amount. Do you think that that amount of $200,000 was enough, on reflection, to dissuade other employers from engaging in the same behaviour?

Ms Parker : A couple of things: we will use a case-by-case approach. We do listen to responses. That was the largest contrition payment we'd ever done. One of the other factors we do take into account—they were all factors, by the way, we take into account in terms of determining the contrition payment. As well as an enforceable undertaking there is also the contrition payment.

Senator WALSH: Do you think it's enough of a disincentive to stop the behaviour?

Ms Parker : One of the other factors we take into account is the financial position of a company. We require them to provide statements. We discuss those with them, we assess those and we get those verified. Those are matters that are commercial-in-confidence. They were a factor in this case. What I would say is that we will in future take into account the size of the underpayment as a major factor. We didn't take it into account in this case. We didn't make it as perhaps as high a priority as we think, clearly, the public and others believe we should. I think it's probably fair to say that, because we are taking a new approach to this, as in requiring a court enforceable undertaking when someone self discloses—as a minimum—we are learning and evolving. We will do that for each separate one.

Is it too low? It depends. The attention that came to that matter, the media coverage and the vilification of Mr Calombaris, was something that—we would have taken two years to get that matter into court. We think that there was a huge deterrence factor gained from the publicity around that. That's only for the good in terms of what we're trying to achieve. As I said, we will continue to evolve and work on our methodology.

Senator WALSH: Thank you. On reflection, given the size of the underpayment of $7.8 million, the contrition payment perhaps could have been higher?

Ms Parker : It's probably fair to say we would have liked it to have been higher, but there were reasons why it wasn't higher.

Senator WALSH: In relation to your process for arriving at these enforceable undertakings, what is the process for involving or consulting the people who have been underpaid to contribute to the decision about whether the employer should be prosecuted or whether they should make a contrition payment?

Ms Parker : In terms of deciding whether they will be prosecuted, we use all of those factors that I mentioned. We're quite open about those. We assess what approach we will take based on all of those factors. There is a view from some in the community that if it's not taken to court it's not serious. We think that enforceable undertakings are very significant regulatory tools. One of the things that will happen with Mr Calombaris—and people may think this is a minor thing; we don't—is that he will be doing seven or eight presentations to the industry at places we select, and he will get up and say, 'I broke the law'—

Senator WALSH: I appreciate that. Can I just ask, for my information, whether the employees—

Ms Parker : Sorry, whether they're consulted?

Senator WALSH: who've been underpaid have any say in whether you pursue a prosecution or an enforceable undertaking?

Ms Parker : No, not specifically. But we do talk to employees. The workers come forward and tell us, so we're in consultation with them all the time around telling us what's going on. So, in terms of finding out what the extent of the underpayment is, workers are consulted, but not as to whether it should be litigated or not. That's the role of the regulator; that's not the role of the community.

Senator WALSH: It was reported in October in The Sydney Morning Herald that Australian restaurateurs would like an amnesty on their underpaid wages. Do you support an amnesty for underpayment for restaurateurs?

Ms Parker : I think that would have to be a matter for someone other than the regulator. I would have some concerns with an amnesty; I think that's fair to say, yes. But ultimately it's not a matter for us to give amnesties, and we wouldn't give amnesties.

Senator SHELDON: Recently the Fair Work Ombudsman made an assessment with regard to Uber—that they were not employees but contractors. I appreciate that the jurisdictions and the legal systems are different to the UK, and recently California has passed legislation giving gig workers rights, specifically ride-share workers. That follows on the heels of New York City providing minimum standards of payments and conditions for ride-share workers there. Can you explain how the decision was made in this context, despite the fact that it was clear drivers had no power to negotiate rates with Uber, nor any of the terms and conditions of their employment? That's something a regular person would consider a normal process for an independent contractor.

Ms Parker : My apologies—do you mean explain the decision?

Senator SHELDON: Yes, in the context that drivers have no power to negotiate rates or any terms and conditions of their employment with Uber, which would be a normal process for an independent contractor.

Ms Parker : I will say that we announced our investigation in June 2019 and we asked for drivers to come to us. Ten of them were reviewed in quite some detail. All of those circumstances were looked at, including the one that you mentioned. We can explain it more at law if I get our chief counsel to explain it, but what this comes down to is that, for us to have been able to find an employment relationship to exist, there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer. Our investigation found that the 10 Uber drivers subject to our investigation were not subject to any formal or operational obligation to perform work. In our examination, we had a range of evidence: drivers, contracts, log-on and log-off records, interviews with drivers and Uber Australia, ABN documents, payments, statements, banking records and pricing schedules. For an employment relationship to exist, there has to be an obligation for an employee to perform work when it is demanded by the employer. In other words, we found that they could work when they wanted to or not work when they wanted to—that there was no employment relationship under the law.

Senator SHELDON: Could I put it in this context. Those are laws which are created for specific circumstances. They came out of the 1800s, 1900s and the year 2000—certainly before the turn of this century. If a worker is not able to negotiate their rate of pay, it is controlled by an app on the basis of performance. They are either disconnected or connected or allowed to continue to work based on that algorithm, which is constantly with the worker, which means they are being oversighted literally every moment of the day. And, when they knock back work, they are terminated. They are disciplined and they find their rating system, which gives them the capacity to earn income, is also affected. Doesn't this sound a little like we are applying an old system rather than a new system to what is now the new work environment for many, many tens of thousands of workers, and particularly in this case Uber.

Ms Parker : We are applying the law as it stands—what the courts have determined, which is that the employee must have an obligation to perform work on demand by the employer. We were not able to find that in the case of those 10. We only looked at 10. We invited more to come forward and 10 came forward to assist us, and that was our finding. We can only apply the law as it stands currently.

Senator SHELDON: On the basis of the communication about how Uber operates, they are economically required to operate for the company if they want to earn a living, feed their family, pay their rent and pay for the vehicle. So they are economically controlled because they have a desired income to be able to actually live. They have control over their work moments during the day and everything they do is rated, literally minute by minute. In fact, the intensity of oversight is more intense, except through estimates! That is more intense! Are you concerned that it says to employers that, if you adopt a similar sort of arrangement, we will see a further multiplier effect of people not receiving what we see as common entitlements for working people?

Ms Parker : You're asking me to comment on policy or what should be. You are right: work has changed. There is no question. I would say also, though, that we assess each gig type of work, if you like, on a case by case basis. They're all different. The finding that we have made on Uber doesn't mean that it applies to other gig examples. You would be aware of Foodora. We took them to court. We were of the view that they were employees. So we don't take a blanket approach to this. Unfortunately, Foodora announced it was ceasing operations and went into voluntary administration. We might call that a success. We drove them out of town. We don't see this as applying necessarily to anyone else. I would also say that others can take this to court, if they don't agree with our assessment.

Senator SHELDON: Are you able to make the legal advice that you have available to parties that are involved in these matters?

Ms Parker : The legal advice?

Senator SHELDON: Is there a caveat that's able to be made on the availability of that legal advice?

Mr Moraitis : It's legal advice provided to the organisation by AGS, I think. Is that correct?

Ms Parker : That's right—yes.

Mr Moraitis : That's obviously privileged.

Senator SHELDON: You rightly raise the question about Fedora and they left three other jurisdictions around the world. Deliveroo, one of their competitors, has been found in the Netherlands to have to pay employee conditions. So these companies can operate if they wish to. We are also very mindful that Fedora left many millions of dollars of unpaid payments in its wake. Deliveroo operates in the same market as companies like Uber Eats and Menulog are companies that operate in the same market. I certainly would say, as would the equally important common person in the street, that they operate in a very similar fashion. What's the progress of investigations into those companies? Are they ongoing?

Mr Campbell : We don't have any active investigations into Deliveroo at the moment. We have previously investigated them. We had concerns about their model but not to the extent that we felt there was sufficient evidence to prove there were sham contracting arrangements in place. We gave that advice to the company and put them on notice of those concerns. It appears that they've made adjustments to the way their model works. That said, we haven't had any complaints come through about Deliveroo that I can point to.

Senator CICCONE: I want to ask a couple of questions with respect to Taskforce Cadena. I want to get a better understanding about the relationship between the Fair Work Ombudsman and the Australian Border Force. Are you able to provide me with how your agency and the ABF separate the different tasks with that task force? Certainly.

Ms Parker : We are a member of Taskforce Cadena and we're also on the phoenixing task force. Part of what we do is share information and intelligence. We refer matters between agencies I've mentioned, but we also do some joint activities. Your question is specifically who does what?

Senator CICCONE: Does one agency chair it? How do you work out who has what responsibilities, who takes lead on certain raids? For instance, I've got particular interest in agriculture. When raids are conducted, how do you go about conducting such raids? Is intel fed through ABF? Is intel fed through the Fair Work Ombudsman? If you could elaborate on that, that'd be great.

Mr Campbell : One of the key aspects of Taskforce Cadena is to identify and disrupt serious noncompliance and organised noncompliance. We're talking about the really systemic, high-end attempts by actors, often overseas, to design systems where labour is exploited in Australia in a range of different sectors. Horticulture is one of those ones. We work with Border Force, which is generally the lead agency on these matters given they've got a criminal jurisdiction and powers to address and deal with those actors. AFP plays an important enforcement role for Cadena as well, particularly with regard to the execution of warrants. In-field activities often involve multiple jurisdictions, so Border Force will be involved, AFP will be involved, we'll be involved, state regulators can be involved too, depending on the circumstances—occupational health and safety, for example, and the new labour-hire organisations in different states as well.

We all have an interest in the circumstances, but the idea is to identify and disrupt the serious organised crime aspects of it. Where we identify illegal workers—for example, on a farm—our intent is not to round those workers up and put them on a pathway to departure. Our intention is to work with Border Force to follow the money, I guess, to the top of that labour microcosm or system and try to identify those players who are responsible for it. So workplace relations jurisdiction is part of it. We gather a lot of intel which is helpful for Border Force, but ultimately the primary goal here is to bring criminal charges against people.

Senator CICCONE: How many people in total work under Taskforce Cadena and how many of these are from the ombudsman's office?

Mr Campbell : Border Force has a standing secretariat and intel unit for Cadena operations. We assign inspectors to it on a case-by-case basis, so it depends on what the operation is and what it involves. We have inspectors all the way around the country, so, if there's an operation in regional Queensland, we will allocate officers to assist with that operation from our Queensland regional network as well. We don't have to allocate full-time operatives to Cadena; we do it on a case-by-case basis.

Senator CICCONE: What's the process that Cadena follow to decide which agriculture properties it will raid? Is that something that you have input in?

Mr Campbell : Sure. We have intel as well. We receive anonymous reports from the community, and we have good relationships with the unions involved in that sector as well, who are happy to identify employers or actors within the sector. We share that with Cadena. Border Force obviously has access to an intel capacity that is more expansive than ours. They ultimately shape up an intel perspective of a particular employer or farm, and that will shape the activity.

Senator CICCONE: So it's fair to say that ABF are the ones who generally will take the lead in raids?

Mr Campbell : Yes. We've been lead in some where we've had full focus on workplace relations issues, but the majority of the cases have involved—

Senator CICCONE: Do you know how long it takes to plan and execute a raid?

Mr Campbell : I suppose it's case by case a little bit. We've been able to turn them around pretty quickly where we've had hot intel come to us that we need to move quickly on a particular farm or an operation, but generally a fair bit of meticulous planning goes into the execution of these activities, particularly when they involve bringing forth the AFP to execute warrants under our behalf. And then we've obviously got to share the evidence as we can under our various jurisdictions.

Senator CICCONE: I'm happy for you to take this on notice to provide any further details—maybe not specific dates of raids but how many raids have been conducted maybe by month or in the last financial year. And break down by state and/or industry if possible.

Ms Parker : As a result of Cadena?

Senator CICCONE: Yes, specifically to do with Cadena. You can take this on notice too. How many officers are typically involved? That might be some of the statistics you might be able to provide to the committee.

Mr Campbell : Let me say for sake of this conversation that we'd generally allocate a minimum of four inspectors to a property. Okay. If it's a bigger property or there are multiple sites we've got to hit, we'll obviously attach more, but generally we want to be on the perimeter, in sight, where the targets are and, obviously, in field as well if we case we need to speak to witnesses.

Senator CICCONE: All right. If you could also provide how many raids there have been since its inception as well, that would be great.

Mr Campbell : Yes. It's better that we describe them as operations, I think.

Senator CICCONE: Operations? Fine. That's all right. I'm happy to work with you on that one.

Senator Payne: To be clear: there won't be a possibility of providing operational details.

Senator CICCONE: No. I'm not after that—just statistics about how many operations have occurred.

Senator Payne: Home Affairs also has significant equity in this area, so agencies will of course consult in terms of the response.

Senator CICCONE: Sure. When a raid is taking place, how long—

Senator Payne: Operation.

Senator CICCONE: I know. I guess what I'm trying—

Senator Payne: You've been watching too many movies!

Senator CICCONE: Well, if only I had more time, Minister!

Senator Payne: Tell me about it!

Senator CICCONE: Is there a standard procedure or policy manual that the ombudsman follows when they do come across an individual? I'm assuming that there'll be a series of standard questions that are asked and, once it is identified that there is an issue on site—let's say at an agricultural site—a determination is made one way or another that that individual will stay or conversations will be had with the farmer or the employer. Is that something you can elaborate on a bit further, Mr Campbell?

Mr Campbell : I can elaborate on what our interest is. If we're speaking to a witness or someone we believe can provide us evidence that's going to assist either our activities or that of our colleagues, we're obviously going to go through a process of understanding the circumstances by which an employee came to work on a particular site. From our perspective, we're interested to know what they've been paid, who they believe their direct employer is, how long they've been working there, their classification and status, any industrial instruments that might take place and any deductions that might be relevant or imposed upon them. They're the types of workplace relations issues that we're particularly interested in and our jurisdiction is responsible for. Quite often those conversations will point to other circumstances which are of interest to Border Force and others. Whether or not someone has had to pay for a visa or has paid a third party to facilitate access to a visa would be information that is relevant to Border Force's activities onsite, too.

Senator CICCONE: So there is a procedure in place, I guess is where I'm going.

Mr Campbell : I suppose it's standard investigative practice, depending on what circumstances we're looking at and the evidence that we're looking to elicit from a person.

Senator CICCONE: When someone is found to be an illegal, is that dealt with by the ABF officers onsite or is there shared responsibility?

Mr Campbell : The descriptor 'illegal' is a little hard to work with. If there is a person we identify as being in breach of their visa conditions that will be of interest to Border Force, and a matter for them, I suppose. We as an agency tend to be reasonably neutral on that subject. We're interested to know, if there was a work right, whether they were paid and whether or not they were paid correctly. Where they weren't we seek to make those recoveries for them.

Senator CICCONE: That's what your inspectors will do onsite?

Mr Campbell : Yes.

Senator CICCONE: What steps are taken against the employer or contractor? How do you go up that food chain—the supply chain? How do you work out where these people have arrived?

Mr Campbell : I'm moving into the operational—

Senator CICCONE: Can you provide anything further in relation to how many successful prosecutions you've had or how many times you've taken people to court over this?

Mr Campbell : As I said before, the prosecutorial activity of Cadena is led by Border Force. They have commenced proceedings for various breaches of the Migration Act and criminal law regarding activities that have been identified as part of Taskforce Cadena, which is the whole point. In terms of articulating Border Force's operational tactics and strategies, I'm not in a position to give you those insights.

Senator CICCONE: Thank you, Chair.

CHAIR: Labor, we've got time for one more question from you. We've got questions from the government, which we'll probably have to put on notice to facilitate the smooth running of the committee.

Senator PRATT: I have one.

CHAIR: One question.

Senator PRATT: Senator Cameron's been watching intently.

CHAIR: Former Senator Cameron, get a life!

Senator PRATT: He said to me: 'You should pursue this question of compliance notices not recovering the total loss of workers' wages.' He said, 'I was told they didn't go back more than six months, but I didn't have the evidence.' I won't read what he said next.

Ms Parker : We did address that, because of Senator Cameron's work on cleaning.

Senator PRATT: That's good. He's keen to check that you're not covering your behinds on enforceable undertakings, so we want to dig down on compliance notices, to see the extent to which someone will be properly protected by a compliance notice. I know we've covered that in part.

Senator GREEN: In his accent, though.

Senator PRATT: No. I'd never do a Scottish accent.

Ms Parker : Is that the question?

Senator PRATT: I know we've covered it partly, but we've worked through the enforceable undertakings and the extent to which there might be gaps in wages paid and that you go to court if it's not. Are there any remaining gaps in getting all entitlements paid in relation to the application of a compliance notice?

CHAIR: That'll be the last question from Labor.

Ms Parker : A compliance notice sets out quite clearly what the—to issue a compliance notice, the inspector needs to have a reasonable belief, only a reasonable belief, that there's been underpayment, in which case they can say: 'Here's the award that you're supposed to be paying. We need you to show that you've been paying correctly.' We then oversee that. The inspectors then oversee and make sure that the money is paid back. We can give Senator—not Senator Cameron—

CHAIR: Former Senator Cameron.

Ms Parker : ex-Senator Cameron comfort that these notices are quite—

Senator PRATT: Robust?

Ms Parker : They're robust, and if they're not complied with we can take the employer to court, and we seek the underpayment and a penalty for not paying.

CHAIR: Thank you, Ms Parker. Senator Sheldon referred to two ads. It is the will of the committee that they have been tabled—thank you very much. I'd like to thank you, Ms Parker, and your officers from the Fair Work Ombudsman for coming along. Consider yourselves released from the hearing.

Proceedings suspended from 18:45 to 19:46