Woolworths’ “rampant exploitation” of contracted cleaning staff in Tasmania has exposed an ongoing problem that extends well beyond any one state and affects employees of numerous major retailers.

A report by the Fair Work Ombudsman, released on Wednesday, revealed 90 per cent of Woolworths’ Tasmanian stores had underpaid cleaning contractors.

While the supermarket giant claimed it had addressed the problem, a former Woolworths cleaning contractor told The New Daily that widespread wage theft was “still happening” and was not isolated to Woolworths.

The New Daily understands that some of Australia’s largest supermarket chains have known about these subcontractor-related underpayment problems nationwide for the past 10 years.

A FWO spokesman said it had “no evidence to indicate that the issues evident at Tasmanian sites were confined to one state”.

A man in his early 30s, who wished to remain anonymous, said he was underpaid while working as a cleaner for Woolworths in Victoria through various subcontractors for several years up until about 12 months ago.

“Most of the subcontractor’s cleaners were paid cash in hand and well below the award [wage],” he told The New Daily.

“When I started I was on a student visa. The subcontractors hire people without proper work rights so you work cash in hand. They hired lots of students and asylum seekers.”

“And I will tell you, this still happens.

He said he was paid $13.50 cash in hand by the subcontractor from 2011 to 2014, before moving to $15 cash. He was eventually paid $18 on ABN, with the contractor issuing invoices.

FWO ombudsman Natalie James said some of the Tasmanian Woolworths workers were paid as little as $7 per hour for training and $14 per hour for work – well below their legal entitlements.

Some Woolworths cleaning contractors were paid as little as $7 an hour. Photo: AAP

The cleaning sector often attracts overseas workers with limited English-language skills and little experience working in Australia, who can be vulnerable to exploitation.

Carrying a similar flavour to the recent franchise industry scandals, such as 7-Eleven, a number of cleaners interviewed as part of the FWO inquiry reported being reluctant to speak up for fear of losing their job.

A Woolworths spokesman said it was committed to paying cleaners if they were found to be underpaid where the relevant subcontractor failed to rectify underpayments.

“Woolworths is supportive of the Cleaning Accountability Framework (CAF) and has been actively involved in the organisation as an Advisory Board member since July 2017,” he said.

Since the inquiry, the company has introduced mandatory third party audits for all cleaning head contractors and a confidential hotline for contractors to report workplace issues.

About $21,000 of the $64,000 in underpayments identified by the investigation have now been rectified.

A call for reform to protect contractors

Jo-anne Schofield, national secretary of trade union United Voice, which represents cleaners, said there has been an “increase” in these kind of exploitative practices in Australia.

“Cleaning is a tough job, often isolated and performed in unsociable hours. Cleaners deserve better than to be forced into these sorts of arrangements,” she said.

“Broader industry reform is necessary to ensure safe and responsible practices. That’s why businesses must sign up to the independent CAF.”

National Union of Workers industrial officer Dario Mujkic said it was not uncommon for cleaning contractors to be underpaid.

“The current laws make it quite easy for companies to get around the rules,” he said.

“The protections for contractors are minimal.

“If a worker is employed by a contractor, they’re often being treated as independent contractors when in actual fact they are employed by a subcontractor.

“They don’t really have unfair dismissal rights, or protections for unfair treatment, and they don’t have rights to collectively bargain.”

Mr Mujkic said that, while not legally responsible, ultimately the onus should fall on the large corporations that benefit from this work.

“This is not a Tasmanian problem, this is not a Woolworths problem – it’s a problem across the country and in many companies,” he said.

“These contractors work side-by-side with direct employees and yet their rights are completely different.

“It’s not going to improve unless the laws change to catch up with the times. They need the same protections as any other worker.”