Australian Firm, Two Indian-Origin Former Subcontractors Fined for Underpaying Foreign Workers

A cleaning company has been fined A$132,217 by the Federal Circuit Court for underpaying overseas workers at the Melbourne Cricket Ground (MCG) in 2014. The Australian court also imposed a fine on two Indian former owners of the company which subcontracted overseas workers to the cleaning company, Fair Work Ombudsman said in a statement on May 29.

The action came following a surprise night visit by Fair Work to the MCG premises in September 2014.

The contractor, ISS Facility Services Australia Limited, was fined by the Federal Circuit Court for its role in underpaying the workers. The court also imposed a fine of A$17,926 each on Sharad Patel and Sidarth Luthra, former owner-operators of subcontractor First Group of Companies Pty Ltd. First Group of Companies, now a deregistered company, rectified the underpayments completely before it was deregistered.

Patel and Luthra were fined for their involvement in sham contracting, frequency of pay and pay slip contraventions by their company. The penalty is a result of the Fair Work Ombudsman taking legal action after its investigation discovered 11 overseas workers were underpaid A$37,471 for cleaning work at the MCG after the AFL preliminary final between Hawthorn and Port Adelaide in September 2014. These workers were mostly international students from India, the Philippines, Colombia and Brazil, the Fair Work Ombudsman stated.

The 11 cleaners were employed by First Group of Companies Pty Ltd., a company ISS had subcontracted between 2009 and 2014 to provide post-event cleaning services at the MCG.

“In Court, ISS admitted knowing in 2014 that the rates it paid First Group of Companies were ‘not sufficient to cover the employees’ entitlements’ and that it was aware of the unlawfully low rates First Group of Companies was paying workers. ISS admitted its conduct contravened workplace laws,” the statement added.

While imposing 43 per cent of the possible maximum penalties against ISS, Judge Suzanne Jones said that principal contractors must be discouraged from using subcontractors that are non-compliant.

First Group of Companies had engaged these cleaners under sham contracts and treated them as independent contractors. This was despite their correct lawful classification as employees. Fair Work Ombudsmen stated that the 11 workers were underpaid individual amounts ranging from $276 to $7,272 over a five-month period in 2014.

The investigation also found that the cleaners were paid flat rates of between A$18 and A$25 an hour to clean after AFL matches. The rates were below the minimum pay and entitlements under Australian Cleaning Industry Award 2010. They were entitled to rates of between $18 and $46 for some shifts.

“The Fair Work Ombudsman has been warning businesses for years: you can’t turn a blind eye to exploitation of contracted workers in your labor supply chains. This case provides a clear example of what can happen if you fail to actively manage your contractors in high risk sectors,” Fair Work Ombudsman Natalie James said in a statement.