Foreign students left without any money due to sham employment contracts

by Ray Clancy on June 4, 2018

in Jobs in Australia

Overseas students and backpackers who get work while in Australia by word of mouth of through friends are being urged to make sure they are not being employed by unscrupulous firms.

The warning from the Fair Work Ombudsman (FWO) comes after an investigation found a number of foreign students working as cleaners were underpaid by a contractor working for a global company.

(Robyn Mackenzie/

They were employed by First Group of Companies on behalf of the global firm ISS Facility Services to work at Melbourne Cricket Ground. But the FWO discovered that First Group of Companies had engaged them under sham contracts.

The Judge in the case noted the negative impact on the workers arising from the monthly pay contraventions, pointing to one example where a worker had to borrow money from friends in order to meet rent, bills and basic living expenses after waiting 45 days to receive his first payment.

The Judge also noted that the failure to provide pay slips further disadvantaged the workers, disempowering them from enforcing compliance by preventing them from being able to independently verify their entitlements

The contracts meant the students were treated as independent contractors despite their correct lawful classification as employees and paid flat rates of between $18 and $25 an hour to clean after AFL matches, rates that failed to meet minimum pay and entitlements.

The company has now been fined $132,217 and FWO Natalie James said that even global companies cannot ‘turn a blind eye to non-compliance by the subcontractors they engage’.

‘The Fair Work Ombudsman will hold-to-account all those involved in exploitation, from head contractors down, and they risk serious consequences if they fail to take steps to ensure that all subcontractors in the supply chain treat workers lawfully,’ she pointed out.

‘These responsibilities start with the procurement process. Price driven procurement that disregards the cost of wages and the dynamics in the market is a recipe for exploitation of vulnerable workers,’ she added.

In Court, ISS submitted that it had been a third party to the underpayments but Judge Suzanne Jones said that was incorrect, adding that principal contractors ‘must be deterred’ from using non-compliant subcontractors.

Judge Jones also imposed penalties of $17,926 against each of the former owner operators of First Group of Companies, Sharad Patel and Sidarth Luthra, for their involvement in sham contracting, frequency of pay and pay slip contraventions by their company. It has now been deregistered.

James added that labour contracting arrangements, including in the cleaning industry, have been a focus of the FWO for several years, with successive inquiries and operational activities uncovering often shocking levels of non-compliance.

She also pointed out that ISS has since taken steps to improve oversight and management of their supply chain, including auditing all of its subcontractors for compliance with workplace laws, reviewing its procurement system to ensure greater insight into the wage arrangements of prospective subcontractors, implementing training about workplace laws for its managers and rolling out an electronic sign-in system to monitor employees’ times of work and calculate entitlements.

‘Deliberate exploitation of migrant workers is completely unacceptable conduct and we will do everything within our power to hold employers engaging in such activities to account,’ she added.

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