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The cleaning market

The Australian supermarket and grocery store industry is highly competitive, generating $105.1 billion in revenue1.

During the period of the inquiry, Australia-wide, Woolworths Ltd (Woolworths, Safeway, and Thomas Dux) held 34.1% market share, followed by Wesfarmers Ltd (Coles and Bi-Lo) which held 30.1%. ALDI Supermarkets Pty Ltd2 and Metcash Ltd (IGA, Supa IGA, IGA X-press, and Foodland) held 7.9% and 7.2% respectively3.

As at June 2015, Woolworths held a significant corporate and industrial footprint as Australia’s ninth-largest company. During the 2014-15 financial year, Woolworths operated 3729 stores across Australia and New Zealand and employed approximately 197 000 employees. In addition to its 961 supermarkets across all Australian states and territories, Woolworths operated 1445 liquor outlets, 516 petrol stations, 330 hotels, 184 Big W stores, nine Thomas Dux stores, 58 Masters stores, 44 Home Timber and Hardware stores as well as a wholesale operation in home improvement servicing with a further 452 stores4.

In 2014, (as the inquiry commenced,) Woolworths’ sales totalled $60.7 billion resulting in an after-tax profit of $2.5 billion. At that time, Woolworths had a long term target of opening 20–30 new Woolworths supermarkets across Australia each year5.

In Tasmania, Woolworths had 31 supermarkets and Coles had 16. While the IGA banner in Tasmania was used by 85 independently owned small to medium sized stores (with its products chiefly supplied by Metcash), Coles and Woolworths represented approximately 88% of market share in Tasmania6

Tasmania’s two major cities, Hobart and Launceston, feature a high concentration of supermarkets reflecting their population. The Master Grocers Australia Competition Policy Review 2014 reported four Woolworths supermarkets, six Coles supermarkets and one Supa IGA supermarket; all within a five kilometre radius7 in Launceston at that time. The same report refers to the issue of ‘market saturation’ and estimates that Woolworths and Coles stores were collectively holding 90% of the Launceston area8.

Labour pricing pressures

There are a number of costs for supermarket owners, such as depreciation, utilities, rent, advertising, administration and transportation, but a key cost is labour.

For the labour costs associated with contract cleaning services, the terms and conditions of employment derive from the Fair Work Act 2009 (the Act) and the Cleaning Services Award 2010 external-icon.png (Cleaning Award).

The Act and the Fair Work Regulations 2009 (the Regulations) regulate the employee and employer relationship in Australia. Among other things they provide a safety net of minimum entitlements, give employees the right to request flexible working arrangements, and prohibit discrimination against employees or prospective employees in respect of protected attributes.

Some of the features of this statutory framework include:

  • 10 minimum National Employment Standards such as personal and annual leave
  • awards that apply nationally to specific industries and occupations
  • registered agreements that could apply to one or a group of businesses
  • record-keeping requirements
  • protection from unfair dismissal and adverse action.

The Cleaning Award covers employers who provide cleaning services under contract. Key features of that award for the purposes of this inquiry include the following:

  • Part-time employees get paid a 15% part-time allowance when working:
    • on weekends
    • ordinary hours on a public holiday
    • early morning, afternoon or non-permanent night shifts.
  • Casual employees receive a 25% casual loading for all hours worked. They may also receive penalty or overtime rates.
  • Minimum engagement provisions for part-time and casual employees range from one to four hours, depending on the size of the total cleaning area. That is, the greater the size, the longer the minimum hours per shift.
  • Employees are entitled to overtime rates when they work more than:
    • 7.6 hours a day
    • five days a week, or
    • 38 hours a week.
  • Full-time employees who work outside their agreed rostered hours are also entitled to overtime rates.

Employees receive an additional 50% loading for the first two hours and an additional 100% loading thereafter when they work overtime between Monday and Saturday. Employees receive an additional 100% loading for all overtime worked on Sunday. For overtime worked on public holidays, employees receive an additional 150% loading.

There are also a range of loading rates for employees working early morning, afternoon and non-permanent night shifts.

The inquiry found nearly all cleaners in the supermarkets were performing duties listed for the Cleaning services employee level one classification.

Store cleaners employed by Coles Supermarkets are covered by the Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited Retail Agreement 2011. This provides uniform conditions of employment for most of its employees.

Workers employed directly by a supermarket, such as IGA employees, who are not covered by an enterprise agreement to clean retail stores, are covered by the General Retail Industry Award 2010 (the Retail Award).

Relevant features of the Retail Award for the purposes of the inquiry include:

  • The minimum daily engagement is three hours for part-time and casual employees, noting a minimum engagement of one-and-a-half hours can apply to full-time secondary school students.
  • Overtime rates are available to full-time, part-time and shift work employees.
  • Employees (except casuals) who work ordinary hours after 6.00 pm receive a 25% penalty.
  • Full-time and part-time employees get a 25% penalty for ordinary hours worked on Saturday. Casuals receive a casual loading and a 10% penalty when they work between 7.00 am and 6.00 pm on Saturday.
  • During the period of the inquiry, employees received an additional 100% penalty for all hours worked on Sunday. Casuals don’t get their casual loading when they work on a Sunday.9
  • During the period of the inquiry, employees received an additional 150% penalty for all hours worked on a public holiday. Casuals also receive a casual loading in addition to the penalty, which is calculated on the casual’s base pay rate.10
  • Full-time and part-time employees receive a 30% loading when they complete shift work between midnight Sunday and midnight Friday. Casuals receive a 55% loading, which includes a casual loading.
  • Full-time and part-time employees receive a 50% loading when they work shift work on a Saturday. Casuals receive a 75% loading, which includes a casual loading.
  • Full-time and part-time employees receive a 100% loading when they work shift work on a Sunday. Casual employees receive a 125% loading, which includes a casual loading.

A number of other local, state and federal laws inform the cost of labour in addition to the Act and the Regulations. These include the Work Health and Safety Act 2012, the Workers Rehabilitation and Compensation Act 1988 and the Food Act 2003.


  1. IBISWorld report – IBISWorld Industry report G4111 external-icon.png – Supermarkets and grocery stores in Australia – Nathan Cloutman, September 2016 – pages 4 - 5
  2. During the course of the inquiry, ALDI did not have a presence in Tasmania
  3. ibid, page 22
  4. Woolworths Limited annual report 2015 external-icon.png
  5. Woolworths Limited annual report 2014 external-icon.png
  6. The Mercury – TasWeekend: Independents deliver price check on supermarket giants external-icon.png
  7. Master Grocers Australia Liquor Retailers Australia Competition Policy Review 2014
  8. Master Grocers Australia Liquor Retailers Australia Competition Policy Review 2014
  9. Some penalty rates in the Retail Award were varied effective the first full pay period commencing (ppc) on or after 1 July 2017. New penalty rates are being transitioned into the award. The Sunday penalty rate effective ppc 1 July 2017 is 95%.
  10. Some penalty rates in the Retail Award were varied effective ppc on or after 1 July 2017. The public holiday penalty rate effective ppc 1 July 2017 is 125%.