Migrant workers underpaid and subjected to sham contracting, FWO alleges

10 March 2023

The Fair Work Ombudsman has commenced legal action alleging that five migrant cleaners in Sydney were underpaid a total of more than $125,000 and subjected to sham contracting.

Facing the Federal Court are Timothy Baxter Chambers and Craig Richard Simpson, former directors of ProClean HQ Pty Ltd, which was formerly subcontracted to provide cleaning services at Sydney Trains’ Auburn Maintenance Centre.

ProClean HQ went into liquidation in 2021.

The Fair Work Ombudsman investigated after the company responsible for maintenance operations at the Auburn Maintenance Centre contacted the FWO with concerns that workers were being underpaid.

The FWO allegedly found ProClean HQ had breached sham contracting provisions of the Fair Work Act by knowingly misclassifying five cleaners as independent contractors.

It is alleged the sham contracting activity resulted in ProClean HQ underpaying the cleaners a total of $125,565 for work they performed at the Auburn Maintenance Centre between February 2018 and April 2019.

The cleaners were Sri Lankan and Nepalese nationals, aged between 19 and their early 20s at the time. They were in Australia on student visas and post-study work visas.

Fair Work Ombudsman Sandra Parker said taking action to protect vulnerable workers, address sham contracting and improve non-compliance in the contract cleaning sector were top priorities for the FWO.

“Sham contracting is extremely serious conduct because it involves employers knowingly or recklessly misrepresentating to workers that they have less lawful rights than they actually do, and it often goes hand in hand with exploitation of vulnerable workers,” Ms Parker said.

“Employers need to be aware that the FWO is prepared to take strong enforcement action to stamp out sham contracting and protect the rights of vulnerable workers.”

“Any employees or employers with concerns about their obligations or rights should contact the FWO for free advice and assistance.”

The FWO alleges that ProClean HQ’s misclassification of the five cleaners as independent contractors included requiring the cleaners to obtain Australian Business Numbers and sign contractor agreements providing for flat rates of pay of $20 to $22 per hour.

It is alleged that under the Fair Work Act, the correct lawful classification of the cleaners was as employees of ProClean HQ, for reasons including that the purported contractor agreements were varied by the parties’ conduct such that the employees would work hours set by the company, were not able to subcontract and were required to follow the company's directions.

It is alleged the five cleaners were therefore lawfully entitled to receive entitlements under the Cleaning Services Award 2010, including penalty rates of up to $55 on public holidays.

It is alleged the workers were underpaid minimum wage rates, casual loadings, weekend and public holiday penalty rates, overtime rates, shift loading and allowances under the Award. Alleged individual underpayments range from $1,057 to $50,926.

The FWO is seeking penalties in Court against Mr Chambers and Mr Simpson.

The FWO alleges Mr Chambers was involved in both the sham contracting and underpayment contraventions and that Mr Simpson was involved in only the underpayment contraventions. They each face penalties of up to $12,600 per contravention.

In addition, the Fair Work Ombudsman is seeking Court orders for the men to make payments to the workers to rectify the alleged underpayments, plus superannuation and interest.

The Fair Work Ombudsman cannot seek penalties and compensation orders against ProClean HQ because the company is in liquidation.

A directions hearing in the Federal Court in Brisbane is still to be scheduled.

The Fair Work Ombudsman makes no allegations against Sydney Trains or any other company involved in the operation of the maintenance centre.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice about their rights and obligations. A free interpreter service is on 13 14 50.

There are a number of factors that contribute to establishing the difference between an employee and an independent contractor. The Fair Work Ombudsman has guidance on its website to help businesses understand when each classification is appropriate.

The Fair Work Ombudsman has an agreement with the Department of Home Affairs, called the Assurance Protocol, where visa holders with work rights can ask for help without fears for their visa. Details are at our visa holders webpage.

Follow the Fair Work Ombudsman @fairwork_gov_au or find us on Facebook www.facebook.com/fairwork.gov.au.

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Media inquiries:

Ryan, 0411 430 902, media@fwo.gov.au