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Education and Employment References Committee
Exploitation of cleaners working in retail chains

ELLIS, Ms Sarah, Senior Member Rights Organiser, Tasmania, United Voice

FLANAGAN, Dr Frances, Research Director, United Voice

HAND, Ms Wendy, Member, United Voice


ACTING CHAIR: I now welcome representatives from United Voice. Information on parliamentary privilege and the protection of witnesses the evidence has been provided to you. I now invite you to make a short opening statement. At the conclusion of your remarks I'll invite members of the committee to ask questions. Does anyone wish to make an opening statement?

Dr Flanagan : I do. As the national research director, my role is to write national submissions on behalf of the union based on an analysis of academic research into historical and legal trends and the instructions I receive from elected officials at a national and branch level. My evidence today will be necessarily pitched at a conceptual and historical level. I'll be relying on my colleagues here today and in other hearings to provide direct evidence of their observations and experiences of worker exploitation in the industry and at a workplace level. Unfortunately a longstanding national executive meeting has meant that the national secretary is not able to provide evidence today, so there may be instances where I'll need to take questions on notice where it's more appropriate for them to answer.

I will speak in broad terms to our submission, which begins with the observation that on paper Australia has some of the world's strongest workplace protections. It has an award system that sets minimum standards, national employment standards, strong worker health and safety protections, recordkeeping requirements for employers, and protection from unfair dismissal and adverse action. Yet the exploitation of retail cleaners is endemic. Our submission explores this disjuncture and it provides an overview of the various frameworks that exist to protect retail cleaners from harm and their limitations.

We argue fundamentally that the high levels of worker exploitation should be understood as a function of the misalignment in the industrial relations framework, which places disproportionate emphasis on regulating the relationship between workers and their technical employers and insufficiently regulates the relationship between workers and the entities that hold true power to determine their wages and conditions. We don't pretend that there's a silver bullet to bring back a culture of compliance in the retail cleaning industry. We canvass a range of policy, legal and campaigning initiatives to ameliorate the exploitation of contract cleaners.

There are two matters I wish to highlight for the committee's consideration in my opening statement. The first is the crucial and unique role of unions in the architecture of the industrial relations system. Second is the need for multifaceted accountability measures between retailers and lead contractors and cleaners at the end of the supply chain. These need to include, but also go beyond, protective rights to victims of noncompliance. They should also include measures that enable meaningful bargaining between cleaners and the entities that have the power to control their wages and conditions.

To briefly address the unique and crucial role of union membership, this is the most basic and important form of protection from exploitation. Workers in unionised workplaces are aware of their rights, actively involved in bargaining with their employers over their conditions of work and empowered to hold employers to account for breaches, although often it is the case that their capacity to act in that way means that the breaches do not occur in the first place. Workplace unionism creates a virtuous circle of legal compliance, worker engagement and mutual striving for high standards. This protective role of unionism is particularly important in industries such as retail cleaning, which have high workforce turnover and a high proportion of temporary migrant workers, which create obstacles to the pursuit of recompense through the formal legal system. We say measures to enhance worker knowledge are important, but knowledge without the ability to enforce rights is ineffective.

We say that the role of unions is complementary but distinct to that of the Fair Work Ombudsman. Effective enforcement regimes have two dimensions: they have both a state inspectorate with a range of enforcement approaches and sanctions, as well as non-state actors, such as unions, that secure compliance. Good enforcement regimes are both protective and participatory. In Australia unions have historically played a significant role in inspecting and enforcing federal labour rights, and we regard it as appropriate that our role is understood to be one of joint regulation with the Fair Work Ombudsman. There are a range of ways in which we say that the Fair Work Ombudsman have made a very significant contribution to reducing levels of exploitation, but there are also a range of differences that I would like to address further in the questions, if the committee is interested in that evidence.

Finally, we say that the accountability measures for retailers should include, and also go beyond, increased enforcement mechanisms. We canvass in our submission a range of recommendations for strengthening the regulatory framework. We certainly support the proposal by Andrew Stewart and Tess Hardy to extend the present secondary liability provisions that exist for franchises and holding companies to other business models. We also recommend increased roles for the Australian Taxation Office in detecting unpaid super and in preventing phoenix activity, and a range of measures to better protect migrant workers, including a communications firewall between the Fair Work Ombudsman and the Department of Immigration and Border Protection. We also support the Cleaning Accountability Framework.

In addition to these measures, we regard it as crucial that there is a reconsideration of the role of enterprise bargaining within the act. We don't view the processes of agreement making and compliance with workplace regulations as discrete and separable activities. Rather, we understand them to be integrated dimensions of industrial relations. The capacity of retail cleaners to meaningfully bargain within the enterprise framework is, in practice, non-existent. Contract cleaning companies employ retail cleaners who have virtually no power over the terms and conditions, which are simply dictated to them by retailers who award the contracts, and workers are strictly forbidden from taking any industrial action against these entities by virtue of the prohibition on secondary boycotts. Our submission therefore argues for a very fundamental redesign of the bargaining provisions of the act that allows workers to achieve an enforceable industry standard that cleaners collectively have a voice and a hand in shaping. Thank you.

ACTING CHAIR: Thank you. Ms Hand and Ms Ellis, do you have any brief comments you'd like to make before we go to questions?

Ms Hand : I'm a United Voice member. I have been a contract cleaner for 15 years. Recently, I've been forced into retirement due to a workplace injury. I sustained this injury because of cost-cutting measures by the company I worked for, who were trying to stretch resources. Now I'm completely reliant on my husband. If I were not married, I don't know where I would be. I'm lucky to be in the position I'm in, but a man is not a retirement plan. Many of the people I have worked with have not been as fortunate as I. This industry does not give workers job security, safety or basic respect. Many cleaners are living in poverty right now because of insecure work and wage theft. Today I'm here to tell you about the realities of life as a contract cleaner and to be the voice of my fellow United Voice members.

Case No. 1: in 2015, 58 cleaners working at various Myer sites in Melbourne were found to have been underpaid a total of $6,300 in one month. These cleaners were paid a flat rate of $17 an hour. Myer had contracted RCS Cleaning Services, who then subcontracted Pioneer Facility Services, who then subcontracted A&K Saana Services. After each contractor took their cut, there wasn't enough left to pay their cleaners the award wages. Case No. 2: in 2014, a United Voice member in Adelaide was engaged as a franchisee—which we think is a codename for sham contracting—for Academy Services for cleaning a Harris Scarfe store and Adelaide Airport. Over four years he was underpaid a total of $168,203.

Closer to home, here in Tasmania, it has recently come to my attention that a large sporting venue has hired a sham contracting company to do their cleaning. This company has hired predominately migrant workers, who are being exploited. They have all been instructed to obtain ABNs. They are not paid award wages, they are not insured and they are too scared to talk to their union. Another example of exploitation in Tasmania is at an education facility. This facility awarded the cleaning contract to a reputable contractor. Having worked for this contractor and having many friends who still work for them, I can say they are the best of a bad bunch.

Bullying is rife, especially towards the migrant workers; wage theft is a regular occurrence; and cleaners are given huge workloads in a limited time period. This contributes to unsafe working conditions, meaning they are unable to complete the work in the allowed time period, which leads them to regularly work unpaid overtime. In addition to this, the work we are given is often unstable and unpredictable. One cleaner who I worked with had to pawn her toaster at Cash Converters to be able to buy food for her baby. This kind of struggle is the norm for cleaners, who struggle week to week to pay the bills and put roofs over their heads. They feel powerless to stand up to employers who bully them into sham contracting and unpaid overtime. The only way to stop this is to employ cleaners directly or to limit the ability for contractors to subcontract and to give unions better access to workplaces. It's time we stamped out this endemic problem in the cleaning industry. Thank you.

Senator ABETZ: Thank you for your submission and, I assume, especially to Frances Flanagan for the written submission, which I found very helpful. Time is of the essence, so allow me to move quickly through the submission to what I consider to be the salient point—that is, for your own ease of reference, page 19 of your submission.

Dr Flanagan : I apologise: I wonder if you might be able to read the title as well. I have a version of the submission with no page numbering.

Senator ABETZ: It is: 'Case study in down-sourcing risk in supermarket cleaning: Woolworths.' In the fourth paragraph down, we are told:

Woolworths and the contractors in its cleaning supply chain were found to have "abysmal" record-keeping.

I think that is completely undisputed by Woolworths or the Fair Work Ombudsman. Coming to the salient point, are you now satisfied that Woolworths does have a rigorous record-keeping process in place? So not dwelling on the past, but they have told us they've done a lot of things, and I'm just wondering what the feedback is from your members or from the various workplaces as to whether Woolworths now have got rid of the 'abysmal record keeping', to use the quote, with which I agree.

Dr Flanagan : I would be seeking instructions from the branch secretary in the Tasmanian branch for a decisive response to that. Based on my understanding, the answer would be no, because essentially we see the exploitation revealed in the Woolworths situation as indicative of a far wider pattern of exploitation that requires systematic changes to the Fair Work Act. In particular, we regard worker involvement in audit processes as being of absolutely crucial importance as well as a redesign of the Act to enable greater accountability at the top.

Senator ABETZ: Can I just interrupt you if I may—only because time is of the essence, and so my apologies for that. Talking about changes to the law et cetera I can understand in those arguments, but, specifically in relation to Woolworths, everybody's agreed they had abysmal records. Are their records any better now and are they of a sufficient standard from your point of view? If not, what else should Woolworths be doing to ensure that their contractual arrangements are of a sufficient standard?

Dr Flanagan : Again, I don't feel I can speak decisively in relation to the Woolworths case, because I'm not across the specific measures that Woolworths have now taken. My understanding is they still have an internal auditing process rather than one involving a cleaning accountability framework or institutions that have work auditing part of the auditing process.

Senator ABETZ: If you could take that on notice for us please and allow that to be answered it would be very helpful.

Dr Flanagan : Yes.

Senator ABETZ: I did note in your submission what you consider to be the importance of union membership. Of course I would expect you, as a union, to say nothing less. Can you explain how union membership and a unionised workforce at Maurice Blackburn protected those workers from being underpaid quite substantial amounts?

Dr Flanagan : I understand that there is a potential for worker exploitation and underpayment to happen in any workplace, so obviously higher levels of union involvement will never be a panacea and a full protection against all forms of exploitation. But, nevertheless, it is the case that an actively engaged unionised workforce does tend to exhibit significantly lower levels of worker exploitation, and that is because the workers themselves hold the workplace to account through high expectations that the law will be complied with, high levels of knowledge and information about what their rights and entitlements are, and an involvement in the process of understanding their employer and in being in a relationship with them through the process of bargaining. All those features are largely absent from the retail cleaning industry, and we see that as being crucial to the reason for the collapse in standards in that industry.

Senator ABETZ: On page 20—and this is a continuation of 'Case study in down-sourcing risk in supermarket cleaning: Woolworths'—in the second paragraph, you asserted:

Woolworths did not renew contracts to lead contractors who submitted bids high enough to comply with WH&S requirements, modern award rates—

et cetera. The evidence from the Fair Work Ombudsman, if I heard it correctly, was in fact to the contrary—namely that the quotes put in by the head contractor would have been sufficient to meet those obligations, but as it got subcontracted down and down and down, with everybody taking their slice of the pie, it led to the horrendous situation of workers being substantially underpaid. So what actual evidence do you have that Woolworths deliberately engaged in not renewing contracts which allowed those basic employment rights to be met?

Dr Flanagan : We seek to rely on the Fair Work Ombudsman's report in that regard, so, to the extent we may have departed from that in our submission, that is a mistake that should be corrected. We don't have independent evidence beyond the Fair Work Ombudsman's report.

Senator ABETZ: All right. Thank you. In relation to your other submission and part of your verbal submission in relation to changes in the Fair Work Act, I understand them but, given the time constraints, won't pursue those further.

Senator BILYK: I might start with you, Dr Flanagan. We've heard evidence last week and obviously today that companies are using subcontracting, sham contracting, labour hire firms and franchising to avoid paying cleaners their legal benefits. We heard from Professor Andrew Stewart last week, and he argued that it's difficult to establish a breach of section 550 of the Fair Work Act to hold to account people who have aided and abetted a contravention of the Employment Standards. Do you have any comments on the difficulty of establishing the actual knowledge of the contravention to prove a breach under section 550?

Dr Flanagan : Simply that we endorse and support Professor Stewart's observation in that regard. It is a very high bar in evidentiary terms to show direct knowledge. I think that's been substantiated by a range of academic studies, as well as the fact that section 550 has been rarely used in practice. We support the recommendations for reform and extension of those provisions beyond the situation of franchisors and subsidiary companies, as recommended by Professor Stewart and Dr Hardy.

Senator BILYK: Do you also support the view that section 558B could be improved by extending it to other business models?

Dr Flanagan : We do, yes.

Senator BILYK: Do you have any comments on how to improve the efficacy of section 558B?

Dr Flanagan : Can you expand on what you mean by 'efficacy'. Is it just the extent to which it is used?

Senator BILYK: Yes.

Dr Flanagan : Not beyond what I said. I think showing actual knowledge is difficult to substantiate. We're often dealing with a workforce where it is inherent to the situation that there are limited written records. Even with a reverse onus of proof, it can be difficult to get records sufficient to engage in a serious, costly and time-consuming matter like litigation. You have a workforce who have a high level of turnover and a higher level of migrant workers, who are likely to be leaving the country at some point. Simply having workers who are in that vulnerable, precarious, short-term position engaging in a time-consuming and expensive matter like litigation is an extremely difficult thing for people to do. So vast amounts of exploitation do not get caught by going through formal litigation. Measures to allow that access to justice to be improved by lowering the evidentiary burden required to show the knowledge of the lead contractor or the lead company are certainly welcome. But, nevertheless, litigation is a major undertaking and for that reason we look to unionism as the primary mechanism for compliance in this workforce. Because it will only be in a small minority of cases that a worker will come along who has the requisite level of evidentiary proof necessary to be able to run a case successfully.

Senator BILYK: We've heard also that there's regular flouting of the law when contracts are changed or when contractors are changed. And when employers decide they won't go on with a contract and go with another then those employees either don't get ongoing work or have to reapply for their work. All sorts of entitlements are not paid out and things like that. Have you got any comments to make about what we do about the workers' vulnerability in those situations?

Dr Flanagan : It is somewhat endemic because of the nature of the industry as it presently exists. There is necessarily going to be a heightened vulnerability for workers at the end phases of a contract because, as soon as the contractor learns that their contract is over, they have suffered the major economic consequences of lower standards of cleaning, for instance—that is, they are losing the contract so the incentives to keep their workforce well and to maintain high standards of cleaning reduces. Similarly, there is a sense of short termism around their ongoing relationship with the workforce. We would say that the best solution to that situation is to bring about a situation where there isn't a regular turnover of contracts—namely, through mechanisms to encourage direct employment—and to have a framework where the industry changes in a sense, so there's not an expectation of regular turnover of contracts but in fact a more stable industry Where cleaning standards are higher, cleaners are retained on a longer term basis, are valued and paid at higher levels, and the entire mentality of quick changeover of contracts is reduced.

Senator BILYK: That's good, thanks. Ms Hand, you mentioned you had an injury. Were you entitled to compensation?

Ms Ellis : Wendy has a confidentiality agreement as part of her settlement so she can't really identify—

Senator BILYK: Is that through the subcontractor? If you're an employee and you have a workplace injury, you've got rights and you can get WorkCover or Comcare. Whatever level you're employed at, there is coverage. But quite often, through sham contracts, people are injured and, I understand, not necessarily supported through that injury. Sorry, I didn't realise there was a confidentiality clause so just speak to us as much as you can.

ACTING CHAIR: Can I just indicate that you're covered by parliamentary privilege. You cannot be pursued by any confidentiality clause. If you are, let us know and we will fix it.

Ms Hand : I sustained an injury to my upper arm and I just couldn't work anymore because it was very painful. But I did get worker's compensation and I had time off work and things like that. We tried to fix the problem and eventually I said, 'I just can't do it anymore. I'm just going to have to give up work.' I would have kept going but—

Senator BILYK: Was it was a bit difficult to proceed?

Ms Hand : Yes. And also they didn't want me there because, who knows, I might have done it again and then we would have to go through the whole process again. So I thought it was just better for me to leave.

Senator BILYK: You mentioned some of the other issues with Myer and other employers. Were those workers union members? How did the end result happen with those things and with the Spotlight cleaners? Are you guys able to answer that?

Ms Ellis : Some of those stories have come from our branches across Australia, but I can tell you about a local example if you wish. Recently we had to deal with sham contracting at the chocolate factory in Hobart. The cleaning contractor had a new contract, and they got rid of half of the cleaners, who'd been there for many years. The other half were retained, and then they had to go through a six-month probation period. Then they brought in some new cleaners, who were all migrants, and they were all put onto ABNs. Those migrants were scared to talk to us, and so our members, who were the permanently employed cleaners, said, 'We need to do something about this.' So we acted for the non-union members to have this resolved, and we forced the cleaning contractor, through the chocolate factory—because they didn't want the bad publicity—to make those cleaners permanent. However, since then I have met, recently, with a contractor of property services, who had had a meeting with the business manager to talk about other contracting work that they may have. He was asked, 'How much do you pay your workers?' and this guy said, 'Award, of course.' And he replied, 'Well, we're not interested, because you'll cost too much.'

Senator BILYK: Just to clarify: so a contractor lost the job, and a new contractor was given the job—

Ms Ellis : Yes.

Senator BILYK: and 20 people, did you say, lost work?

Ms Ellis : I'm not sure of the number.

Senator BILYK: Sorry; I've got a hearing problem, so sometimes I'm just not—

Ms Ellis : I can't give you an exact figure.

Senator BILYK: But people that had been there for a long time lost their work, and the ones that retained employment—

Ms Ellis : Had to go on probation.

Senator BILYK: had to go on probation for six months, even though some of them had been doing their job for years?

Ms Ellis : Yes, and that's a regular occurrence within the industry. Every time a new contractor comes in, then they have to be on a six-month probation.

Senator BILYK: What would the union like to see happen around all of this?

Ms Ellis : We'd like to see more cleaners directly employed. We like to be able to have better access to cleaners. Often we will be lied to by the cleaning contractor about where we can find the cleaner. They won't tell us what time they work. If an organiser does get to go into a building, it's not uncommon that we'll be followed around by the manager, and of course the cleaners won't speak to us.

Senator BILYK: I think you guys cover cleaners in Coles as well. Is that right, or has that changed since they've gone on to be employees?

Ms Ellis : As they are part of the enterprise agreement, they will be covered by the SDA.

Senator BILYK: Did you use to cover them?

Ms Ellis : If they are covered by the cleaning award, then we would have coverage.

ACTING CHAIR: Ms Hand, did you want to say something?

Ms Hand : No. It's okay.

ACTING CHAIR: Ms Flanagan, the proposition put by Woolworths this morning was that they were going to sign off on the Cleaning Accountability Framework. Is the Cleaning Accountability Framework, in your view, a good substitute for any legislative change or access to workers by the union?

Dr Flanagan : We strongly support the Cleaning Accountability Framework and we strongly support it in the context of the laws that presently exist. However, we do not regard it as sufficient by itself and also seek for changes to the laws to improve the position of retail cleaners in a structural way.

ACTING CHAIR: Ms Hand, would you like to indicate to us, if you want to, the yearly salary that you earn as a contract cleaner?

Ms Hand : I don't know the answer to that one.

ACTING CHAIR: You don't know the answer?

Ms Hand : No. I'm sorry, I've got a—

ACTING CHAIR: mental block?

Ms Hand : Yes.

ACTING CHAIR: With the wages that you've earned, you've also had superannuation paid?

Ms Hand : Yes.

ACTING CHAIR: It's not a high wage, is it?

Ms Hand : No.

ACTING CHAIR: Do you know what your hourly rates have been?

Ms Hand : Yes. By the time I finished, it was $21.47 or something crazy like that.

ACTING CHAIR: That was with a contract cleaner?

Ms Hand : Yes. I'm not quite sure; it might have been different. I just remember that figure; it just comes into my head.

ACTING CHAIR: So it's not an extremely high hourly rate.

Ms Hand : No.

ACTING CHAIR: Does that still leave you with some financial challenges?

Ms Hand : Yes. For me, as I said, my husband is there. Other people don't have husbands and they've usually got children. It's just difficult. I mean, you just can't do it.

ACTING CHAIR: Have you ever been in a position where you could bargain with your employer?

Ms Hand : No.

Senator O'NEILL: Let the record show that Ms Hand is laughing.

ACTING CHAIR: So you, along with other cleaners, have never been in a position to increase your wages through enterprise bargaining?

Ms Hand : No; definitely not.

ACTING CHAIR: Has it ever been raised with any of your employers?

Ms Hand : No.

ACTING CHAIR: Why is that? Is it because there's just not enough money to increase your wages?

Ms Hand : I think they make it clear that there's no increase in wages. There's no way they can move that with the contract that they've got, that they've tendered for. There's no way that the wages can be increased.

ACTING CHAIR: Ms Flanagan, I note that there is only a very, very minor amount of cleaning companies with enterprise bargaining agreements. Are you aware of that?

Dr Flanagan : I am broadly aware of that, yes.

ACTING CHAIR: Is this just a question of union access? Is it a question of the contract price that's being used? What are the issues from the union's perspective that don't allow contract cleaners to access bargaining as other workers can?

Dr Flanagan : The primary issue is the nature of the industry, which means that cleaners' technical employers do not in fact control the extent of the wages and conditions of their workforce. These are dictated to them by the retailers or the contractors above them in the supply chain, so they have no real power to bargain with employees. In fact, the best they can do in most cases is simply pay the award. As the committee has already heard, in some cases even paying the award would be sufficient to put a contractor out of eligibility to take a tender.

So we regard the fundamental flaw that prevents meaningful bargaining as being the cut-throat nature of the contracting industry paired with the focus of the industrial relations system on bargaining between the worker and their technical employer rather than on the entity that truly controls their wages and conditions. Laid upon that is also the problem of union access, which means that these workforces tend to have a very small level of union density, and that is to do with a range of features to do with the kind of work involved—night work, small numbers of workers, disaggregated workforces. This makes it difficult to find and meet with these workers. High worker turnover and high levels of migrant workers being present means that there can often be levels of intimidation and threat. People's immigration status can be threatened if they work for an employer who has a negative disposition towards unions, of which there are regrettably some. There are also strictures on our ability to access workers under the Industrial Relations Act.

So, while the right of access provisions appear quite reasonable on paper, in reality they present obstacles in facilitating true access to meeting members or potential members. There are multiple reasons for this. Firstly, there are provisions around providing rights to entry to discuss, but these are confined to breaks. Often it is the case in the cleaning sector that workers are only given four-hour shifts and, while they may work multiple four-hour shifts, they in fact don't have a break, so we don't have a chance to meet them. There are also problems with the provisions around entry to inspect provisions that also mean that our physical access to workers is also limited.

ACTING CHAIR: There is only one issue that I want to take up with you. When I was a union official my access to employers was far more easy than it is for current union officials. I don't really think, even on a technical analysis, that they are very reasonable rates of entry. Are you indicating that you think they are reasonable on paper?

Dr Flanagan : Probably not. As I said, I was just trying to highlight that, if you weren't aware of the reality of the industry and the reality of the work, what is on paper might appear prima facie reasonable when in practice it was even more unreasonable. But, no, our position would be that, even on paper, those rights are too limited.

ACTING CHAIR: Thank you, Dr Flanagan, Ms Hand and Ms Ellis for your evidence today.