The findings of this inquiry indicated that while Woolworths had measures in place to manage the risks of non-compliance in its supply chain relating to cleaning services (for instance, auditing, visitors’ books, identification and limits of contracting), the company failed to invest in ensuring these measures were complied with.
By not actively checking to ensure that its principal contractors were complying with the terms of the service agreements, Woolworths failed to properly manage its labour supply chain at the time.
Woolworths also failed to appreciate the dynamics of the market below the principal contractor level.
Based upon the FWO’s observations and experience of other labour supply chains, there is little utility in establishing governance arrangements if they are not going to be enforced by active, regular and frequent management interventions.
In practice, the terms of the service agreements Woolworths had secured with its principal contractors were ‘optional’.
The passage of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 has resulted in the increase of penalties for record keeping breaches and ‘serious non-compliance’.
The supermarkets subject to this inquiry are on notice of the new powers and penalties at FWO’s disposal.
The inquiry has informed a series of recommendations to be considered by Woolworths, Coles and IGA.
The FWO is open to working with these supermarket retailers to ensure that their employees and workers within their supply chains continue to receive their lawful workplace entitlements.
In particular, the FWO is seeking to enter into a compliance partnership with Woolworths that incorporates a range of measures designed to enhance management of its cleaning contractors at all of its sites, not just those in Tasmania.
It is intended that the partnership be modelled on the existing compliance partnership that regulates Woolworths trolley collecting services. This partnership, underpinned by a proactive compliance deed, has set the benchmark on managing compliance within a labour supply chain. The FWO is keen to implement a similar arrangement to ensure best practice governance arrangements apply to its contracting of cleaning services and thus position Woolworths as a market leader in this domain.