A contracted provider found to be engaging in underpayment of wages or exploitation presents a key risk to the reputation of a Council. Ratepayers expect Councils to deliver cost effective services. But the community has also shown little tolerance for those at the top of supply chains failing to take responsibility for vulnerable workers. The desire to deliver value for money needs to be balanced with the moral and ethical dimensions of how those services are delivered and the impact that a publicly funded entity such as a Council may have in influencing prices and behaviour in a highly competitive sector. The reality is likely to be that security providers will be primarily motivated by commercial considerations in a market where price is often the key driver to whether they will be successful in securing work.
Case study – potential brand damage mitigated
Melnor Security Service Pty Ltd [Melnor] was contracted by Tamworth City Council to provide security services at the Country Music Festival in 2015. Two security guards at the festival were underpaid more than $6000, with their rates of $26 to $28 per hour not enough to meet minimum entitlements under the Security Award. Depending1 on their classification, they should have been paid up to $43.85 per hour for night, weekend and overtime work.
When the Inquiry identified this underpayment, Melnor cooperated with the FWO, promptly reimbursed the guards, and entered into an EU with the FWO to ensure future compliance.
Council procurement officers are balancing these tensions in deciding who to engage and what sort of monitoring arrangements to put in place. Unless they manage these tensions carefully and conscious of the dynamics in the sector, Councils risk being seen to have contributed to underpayment of workers ‘down the chain’ just as much as the security providers, with damage to their reputation and standing in the community.
- Security guards underpaid at major music festival media release