Adele Ferguson, 27 October 2015

Baiada’s three-year “Proactive Compliance Deed” with the Fair Work Ombudsman should be a wake up call to corporate Australia that the days of hiding supply chain abuses behind the corporate veil are over.

It should also be a wake up call to consumers to start questioning the real price they are paying for some products and services. In some cases, the cheap prices are created on the back of illegal wages and other forms of worker exploitation.

For Baiada, the deed requires Baiada to take responsibility for the abuse of workers in its supply chain through contract arrangements.

It includes stumping up $500,000 toward compensating workers who were underpaid and giving Fair Work access to its worksites as well as report the outcome of audits of its operations.

With a trend by companies to outsource more and more parts of their supply chain, and in some cases use labour hire contractors, the “deed” poses a potential chink in the armour of companies trying to argue wilful ignorance when it comes to parts of their supply chain or products they are sourcing from overseas.

Corporations are accountable

Put simply,the Baiada deed is saying corporations can be held accountable for misconduct by their contractors or sub-contractors.

A statement by the Fair Work Ombudsman Natalie James says: “Over the life of the deed, Baiada has agreed to assume responsibility for the underpayment of workers engaged in its supply chain through contract labour arrangements, even though it is not their direct employer.”

Equally interesting is the wording of the deed that “Baiada believes it has a moral and ethical responsibility to require standards of conduct from all entities and individuals involved in the conduct of its enterprise, that comply with the law in relation to all workers at its sites, and meet Australian community and social expectations to provide equal, fair and safe work opportunities for all workers at all of its sites”.

In a recent Senate hearing held in Adelaide the supermarket giant Coles was grilled about its relationship with Baiada, which supplies chickens to the retailer under the brands Lilydale Select and Steggles. It then sells them to consumers, who are looking for a bargain.

Price war catches workers in crossfire

Coles is in the midst of a savage price war with Woolworths and Aldi, with customers reaping the benefits and with some suppliers caught in the crossfire.

Coles told the senate it had appointed Pricewaterhouse Coopers to audit Baiada and “if we find something untoward we will get them to address it”.

The representatives of Coles told the Senate the company was looking at its supply chains and if there was evidence of mistreatment, it would take action. But it said the final report by PWC would not be shared publicly.

It will be interesting to see where this ends and whether Coles or other big corporates become embroiled in the net.

In the past few months Australia Post, 7-Eleven and more lately Myer have been dragged through the headlines with allegations of wage abuse.

Myer hit the headlines last week with allegations that its cleaning contractor Spotless had hired cleaning subcontractors, some of which were underpaying wages. It wasn’t a good look for Myer, despite the many denials that it knew anything about it.

Firms on high alert

It is probably right, but all companies that use contractors who use hire firms should be on high alert. Ditto for companies that source products from Third World countries renowned for sweat shops.

One of the more egregious cases of systemic wage exploitation was 7-Eleven, where some staff hadn’t been paid for months and were forced to eat food out of the bin or sleep in a park after getting kicked out of their apartment when unable to pay rent.

This was an interesting case because it is based on a franchise network, which means the corporate head office doesn’t directly employ staff but managed the payroll for the bulk of franchisees.

But like Baiada, the backlash was such that 7-Eleven decided to open up a compensation scheme and compensate staff then chase its franchisees for the money.

The scandal at 7-Eleven also put a mirror up to customers, with some boycotting the stores after watching ABC’s Four Corners, The Price of Convenience.

Issue for the nation

In the program one 7-Eleven worker said: “A barista-style coffee sells for $1. The people who are paying the real price are those international students. They’re working like slaves in your stores, for $10. They have a tagline and it’s called ‘Good call’. That’s what they call it. And I thought it’s not a good call at all.”

Since then there have been a flood of emails about nail parlours paying cheap wages, some other franchise operations, petrol station outlets, restaurants and trolley contractors used at big retailers.

It is a big issue given one in 10 workers in Australia are on a visa and many of them are vulnerable and being exploited. This, together with a focus on the bottom line and gaps in the law, has resulted in some companies doing the wrong thing thinking that hiring contractors will provide plausible deniability.

Let’s hope Baiada’s “deed” is the start of a new trend for corporate Australia and consumers who should make a stand against misconduct.

Extracted in full from the Sydney Morning Herald.