Cleaners at Oaks Hotels & Resorts back-paid $1.9 million

9 November 2016

A major Australian hotel chain has back-paid 1500 of its cleaners a total of $1.9 million after underpaying them as a result of misclassifying them as independent contractors.

The back-pay has been recovered for cleaners at Oaks Hotels & Resorts Ltd as a result of the Fair Work Ombudsman’s Inquiry into the practices of some major 4-and-5-star hotel operators when procuring cleaning services.

The Inquiry found Oaks used its subsidiary entity, Housekeepers Pty Ltd, to engage cleaners as 'independent contractors', when the cleaners' correct classification was as employees.

The cleaners, mostly overseas workers, were paid on a rate per-room-cleaned basis- but they were lawfully entitled to receive minimum employee wages and conditions.

As an alternative to legal action, Oaks and Housekeepers agreed to enter into Enforceable Undertakings with the Fair Work Ombudsman earlier this year.

One of the many requirements of the EUs was Housekeepers agreeing to conduct a self-audit and rectify all underpayments of cleaners stemming from the misclassification.

The self-audit has now identified that 1502 cleaners across Oaks' more than 40 Australian hotels were underpaid a total of $1.9 million between August, 2015 and August this year.

This was a result of underpayment of cleaners’ minimum wages and superannuation, as well as significant unlawful deductions from their pay for a range of reasons, including for public liability insurance, chemicals and equipment, administration fees, payroll tax and uniforms.

Housekeepers, which now engages cleaners as employees, has back-paid the workers in full.

Fair Work Ombudsman Natalie James says the outcomes highlight the ability of her Agency to use Inquiries and EUs to get companies with significant non-compliance issues to take responsibility for resourcing and driving rectification of their issues – in some cases, achieving outcomes that could not be achieved through litigation in the Courts.

Ms James will today tell an Australian Hotels Association conference that the large underpayment and wider Inquiry findings clearly highlight the need for lead businesses in Australia to consider the steps they can take to enhance compliance in their supply chains.

"It’s not about removing the responsibility of the direct employer – it’s about making sure that those at the top aren’t unfairly benefiting or turning a blind eye to the impacts on the workers at the bottom," Ms James says.

Ms James warns "it is now a normal part of our work when we find exploited workers to look up the supply chain and ask: what part has the business benefitting from the labour had to play in what has occurred?" Ms James says the cleaning industry often involves vulnerable workers at the bottom of complex supply chains and has been a priority for her Agency.

The Inquiry findings and EUs are available in the Statement on outcome of Inquiry into the housekeeping services of 4 and 5-star hotels

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