Coles supply chain caught short-changing trolley collectors

A former company director and his operations manager have been penalised a total of $188,100 for their role in underpaying 10 Adelaide trolley collectors by more than $220,000.

The penalty, handed down by Justice Anthony Besanko in the Federal Court, ends more than five years of action by the Fair Work Ombudsman to uphold the workplace rights of trolley collectors in the Coles supply chain in Adelaide.

Sydney-based Starlink entities – now in liquidation – provided trolley collection services to Coles supermarkets at West Lakes, Elizabeth, Munno Para and Gawler.

Starlink director Nidal Albarouki and operations general manager Clency Ferriere each have been penalised $94,050 for their part in sub-contracting arrangements that short-changed vulnerable overseas trolley collectors over 18 months.

The Fair Work Ombudsman has worked down three levels of the Coles supply chain to gain enforcement outcomes on the Adelaide underpayments.

At the top of the chain, Coles signed an enforceable undertaking (EU) with the Fair Work Ombudsman in October 2014, publicly admitting it had “an ethical and moral responsibility” for the conduct of all persons involved in its business.

This followed concerns by the Fair Work Ombudsman that trolley collectors employed by some of its sub-contractors were being paid as little as $5 an hour.

As part of the EU, Coles agreed to back-pay more than the amount owed to the 10 Adelaide trolley collectors by the two third-tier trolley service providers at the end of the supply chain.

The EU also required Coles to establish a $500,000 fund to be used to back-pay any other trolley collectors subsequently found to have been underpaid.

Coles has now provided a first-year report to the Fair Work Ombudsman on steps it has been taking to stamp out exploitation of vulnerable trolley collectors across hundreds of its sites.

Coles has revealed that since the EU was signed in October 2014:

  • Seven trolley collectors have been back-paid a total of $41,030.
  • The wages of 400 collectors working for 15 sub-contractors were audited.
  • Workplace-relations training has been delivered to relevant Coles team members.
  • 558 of its 776 stores now have in-house trolley-collection services to minimise the risk of underpayments by sub-contractors.

Coles Operations and Supply Chain Director Andy Coleman has told the Fair Work Ombudsman the company has transformed its trolley-collection service across Australia to eradicate underpayment of trolley collectors.

“We believe it is vital to ensure fair practices apply to all team members at our stores and believe positive relationships with our team members are essential for our business,” he said.

“We previously had around 30 contractors engaged to provide trolley-collection services, but moved to one national trolley-collection provider in late 2012.

“We have since made further improvements to the management of our trolley collection by directly employing our own team to collect trolleys at more than 520 stores across Australia.”

Underpayment of trolley collectors around Australia has been a persistent problem for many years.

Fair Work Ombudsman Natalie James says she is heartened that Coles is making progress on the issue after admitting that its former practice of contracting third parties to manage its trolley collection was open to abuse.

“Contracting or outsourcing are legitimate options for business,” she said. “However, the effect of these arrangements can be to undermine entitlements to employees, particularly when there is a very competitive tendering process.

“There is a risk that, without taking conscious steps, the beneficiaries of the labour can lose a line of sight to what workers toiling for their benefit are being paid.

“A diligent approach is required when outsourcing work, particularly when engaging lowest-cost providers. It is important to ensure that the lower costs are achieved through legitimate means, such as enhanced efficiency or economies of scale, and not due to exploitation of vulnerable workers paid below the lawful minimum rates.”