Pioneer: Legal win for Fair Work Ombudsman against cleaning contractor with Woolworths

Court finds national cleaning contractor with Woolworths was involved in the unlawful underpayment of supermarket cleaners.

The workers were paid below-award flat hourly rates of just $14 and $15 to clean stores between 3am and 6am.

In a legal win for the federal workplace regulator, a court has found a national cleaning contractor with Woolworths was involved in the unlawful underpayment of supermarket cleaners by a subcontractor.

As part of ongoing attempts to make businesses legally responsible for contractors underpaying workers, the Fair Work Ombudsman took legal action against Pioneer Facility Services and Pioneer Contracting Services over the engagement of subcontractors to clean four Woolworths’ sites in Tasmania.

The ombudsman alleged the Pioneer companies, which have an annual turnover of about $50 million, did not pay Sun Gun Hwang and his company OzKorea enough money to ensure the workers were paid the legal award minimum.

The workers were paid below-award flat hourly rates of just $14 and $15 to clean stores between 3am and 6am. They were underpaid $21,824.

Despite vigorously denying accessorial liability, the Federal Circuit Court found the amounts paid by Pioneer to OzKorea was not enough for the subcontractor to meet its award obligations. In one month, Pioneer paid $21,700 but the workers should have been paid at least $23,664.

Judge Alister McNab found Aaron Dickinson, the PFS chief executive and PCS sole director, knew the amount paid to the contractors was insufficient to meet the minimum legal standards.

The court found Mr Dickinson had knowledge of the cleaning award; knew the amounts paid by PCS to the subcontractors, knew the number of hours required to be worked to fulfil the Woolworths contracts and that the early morning times when the work was performed would attract penalty rates.

Judge McNab found that the two Pioneer companies were “knowingly concerned” in the underpayment contraventions by Mr Hwang and OzKorea. A penalty hearing has been scheduled for October.

He said PCS, as the head contractor, was aware of the work that needed to be done, the hours that needed to be worked, and the cost of the work when paid in accordance with award standards.

“It will often be the case that it will not be possible to prove that a head contractor has actual knowledge of the sums paid to the employees of subcontractors,’’ he said.

“However, this does not mean that they do not have actual knowledge that the sums paid to the subcontractors are insufficient to meet the minimum employment standards of employees of the subcontractor.

“Further, I do not accept that it is a requirement that the head contractor be aware of the amount paid to each employee each pay period or the hours worked by each employee.”

Woolworths has agreed to audit cleaning contractors each year and rectify underpayment of cleaners after a scathing ombudsman’s report found poor governance by the supermarket giant contributed to serious exploitation of vulnerable workers.