Hundreds of workers picking mushrooms allegedly short-changed almost $650,000
12 October 2016
NOTE: In July 2018, the Federal Court issued a judgment that rejected some submissions made by the Fair Work Ombudsman in relation to the operation and application of piecework agreements under clause 15.2 of the Horticulture Award 2010 and dismissed the Fair Work Ombudsman’s allegations that Marland Mushrooms and Mr Troy Marland were involved as accessories in the underpayment contraventions detailed below.
The Fair Work Ombudsman appealed the July 2018 judgment and this was the subject of a split decision of the Full Federal Court of Australia in Fair Work Ombudsman v Hu & Ors  FCAFC 133 delivered on 16 August 2019.
In September 2019, the Fair Work Ombudsman filed an application in the High Court of Australia seeking special leave to appeal against the August 2019 judgment.
On 14 February 2020, the High Court refused the Fair Work Ombudsman’s special leave application. The Fair Work Ombudsman’s proceedings against HRS Country Pty Ltd’s (in liquidation) director Tao Hu are still before the Federal Court.
A national Inquiry into workplace practices in the horticulture industry has uncovered the alleged underpayment of hundreds of pickers on a Queensland mushroom farm.
The employees were allegedly short-changed almost $650,000 over eight months.
The Fair Work Ombudsman today announced it is taking unprecedented legal action in relation to the underpayment of workers at a mushroom farm, at Stapylton, south of Brisbane.
The Agency is testing workplace laws relating to piece rates.
For the first time, the Fair Work Ombudsman is alleging that agreements between an employer and employees to pay piece rates did not take effect because the pickers to whom they applied were not able to earn a sufficient wage.
Facing the Federal Court is the former owner-operator of labour-hire company HRS Country Pty Ltd, Tao Hu. The company went into liquidation earlier this year.
Also facing Court is Troy Marland and his company Marland Mushrooms Qld Pty Ltd.
Mr Marland is a Director of the Australian Mushroom Growers’ Association.
Marland Mushrooms supplies produce to major retailers.
The Fair Work Ombudsman alleges it provided Ms Hu and Mr Marland advice about minimum entitlements for workers on piece rates in February, 2014, after the Agency looked into a request for assistance from a worker who claimed to have been underpaid.
The Fair Work Ombudsman also conducted an investigation as part of its national Harvest Trail Inquiry, which is aimed at improving compliance with workplace laws in the horticulture industry.
It is alleged that Fair Work inspectors identified that 406 workers on the Marland Mushrooms farm, including a number of overseas workers, were collectively underpaid a total of $646,711 between January 1 and August 31, 2014.
The workers were employed by Ms Hu’s labour-hire company, which was contracted to supply labour for Marland Mushrooms.
Workers were allegedly being paid piece rates of between 60 and 80 cents a kilogram.
Under the Horticulture Award, pickers can lawfully be paid piece rates, rather than an hourly rate, but the piece rates paid must allow an average competent picker to earn at least 15 per cent more than the relevant minimum hourly rate under the Award.
The Fair Work Ombudsman alleges its investigation discovered that because piece rates for HRS Country-employed pickers at the Marland Mushrooms farm were set so low at that time, the pickers were able to earn 15 per cent more than the Award rate on only about three per cent of all days they worked.
At the relevant time in 2014, the minimum for an average competent adult casual pieceworker under the Award was between $21.09 and $22.86 – but inspectors allegedly found the piece rates paid to the workers at that time resulted in them receiving substantially less than the average hourly rates.
The Fair Work Ombudsman alleges that because the workers’ piece-work agreements did not allow the average competent picker to earn the minimum hourly rate under the Award, the piece-work agreements did not take effect.
It is alleged the workers were therefore entitled to have been paid the minimum Award rate, plus a casual loading.
The workers were allegedly also underpaid public holiday penalty rates and not provided with paid meal breaks, as required under the Award.
A contravention of pay-slip laws is also alleged.
The Fair Work Ombudsman has commenced legal action against Ms Hu because she was the controlling mind of her company and was responsible for directly employing and underpaying workers.
The Agency also alleges that Mr Marland and Marland Mushrooms were involved in the underpayment contraventions as accessories.
It is alleged that Marland Mushrooms knew that pieceworkers were not being paid their minimum lawful entitlements.
Further, it is alleged that Mr Marland was aware, or was wilfully blind to the fact, that the workers were being underpaid.
Fair Work Ombudsman Natalie James says a key factor in the decision to commence legal action was that Ms Hu and Mr Marland failed to take any meaningful steps to ensure pickers’ minimum lawful entitlements were being met after Fair Work inspectors educated them in February, 2014.
“The allegedly large scale underpayment is also a concerning feature of this case,” Ms James said.
Mr Marland and Mr Hu face maximum penalties of up to $10,200 per contravention, while Marland Mushrooms Qld Pty Ltd faces penalties of up to $51,000 per contravention.
As all alleged underpayments remain outstanding, the Fair Work Ombudsman will seek a Court Order for any penalties imposed to be paid to the workers to partially rectify the underpayments.
A directions hearing is listed in the Federal Court in Brisbane on October 20.
The Harvest Trail Inquiry is focusing on the horticulture and viticulture sectors nationally in response to ongoing requests for assistance from employees in the sector, persistent underpayments and confusion among growers and labour-hire contractors about their workplace obligations.
Ms James says the ongoing Inquiry has found numerous examples of employers setting piece rates for pickers without proper regard for whether the piece rates will allow workers to earn a sufficient wage.
“Piece rates are a long standing feature of wage setting in the horticultural sector - but piece rates must be executed lawfully,” she said.
“This means they must agreed in writing between the employer and employee and they must be set at a level that allows an average competent picker to earn at least 15 per cent more than the relevant minimum hourly rate under the Horticulture Award.
“We are seeing too many cases of employers thinking piece rates offer a loop-hole they can use to get away with paying vulnerable overseas workers very low wages for picking fruit and vegetables on Australian farms, regardless of how competent or hard-working the pickers are.
“This case involves us testing laws relating to piece rates by alleging in Court, for the first time, that piece rates paid to a group of pickers were unlawful because they were so low it was almost impossible for them to earn a sufficient wage.
“We hope this legal action will result in greater clarity for employers in relation to their obligation to ensure the piece rates they pay pickers are at a level that enables a competent picker to earn a sufficient wage.”
Ms James said that while her Agency respects that overseas backpackers have an important part to play in providing seasonal labour in the horticulture industry, when piece rates are paid they need to be implemented lawfully and fairly.
“While many employers want to do the right thing, there are some who seek to gain a competitive advantage by exploiting vulnerable workers, such as visa-holders,” she said.
The Harvest Trail Inquiry is one of a number of Inquiries the Fair Work Ombudsman has underway to identify and address the structural and behavioural drivers of non-compliance in various industry networks and supply chains.
Ms James reiterated her call for major national employers to be proactive about trying to ensure workers involved in their supply chains are not being exploited.
“Increasingly, if we find a business underpaying workers and that business is part of a supply chain, we are looking up to the top, because the business at the top of the supply chain is the price-maker and controls the settings,” she said.
Employers and employees seeking assistance can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94. An interpreter service is available on 13 14 50.
Ms James said the Agency recently launched an Anonymous Report function which enables members of the community to alert the Fair Work Ombudsman to potential workplace issues. Intelligence can be provided at www.fairwork.gov.au/tipoff.
Follow Fair Work Ombudsman Natalie James on Twitter @NatJamesFWO , the Fair Work Ombudsman @fairwork_gov_au or find us on Facebook www.facebook.com/fairwork.gov.au .
Sign up to receive the Fair Work Ombudsman’s media releases direct to your email inbox at www.fairwork.gov.au/mediareleases.
Ryan Pedler, Assistant Media Director
Mobile: 0411 430 902
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