Your obligations with Contractors.

Legal Advice for Growers - Your obligations with Contractors.

  • Author is Michael Waters, MRH Lawyers - Partner and Industrial Relations Specialist (contact phone is 07 4154 5510) 
  • Issued by BFVG on behalf of MRH Lawyers - Corporate Sponsors of BFVG (Bundaberg Fruit & Vegetable Growers Cooperative Ltd)

LIABILITY OF GROWERS - For underpayment and mistreatment of contracted employees.

We all watched with interest as the ABC’s Four Corners programme exposed the greyhound live-baiting scandal. The Racing Board has recently said that it has triggered a bigger enquiry then even the Fine Cotton affair in the early 80’s. It will continue for months, perhaps years.

Now it’s the turn of the Horticulture Industry. Everyone will have different views on the subject depending on what they have seen, what they have heard and what they know, and I am sure that everyone will happily share their opinion with anyone who asks. My focus is on what the law says about the liability of growers for the acts of their contractors.

The allegations in the Four Corners programme related to mistreatment of employees, underpayment of employees and breaches of the Fair Work Act generally, by contractor employers. We can throw breaches of the Work Health and Safety Act in there as well as the allegations clearly relate to work health and safety matters. The question that every grower should be asking is - “What happens to me if my contractor does something wrong?”

This question is not unique to the Horticulture sector but it is particularly important for the sector. Four Corners alleged that contractors used by growers are often hard to track down, hard to find details of and regularly disappear into thin air. This means that if something does go wrong such as an injury, death, a complaint or an action brought by the Fair Work Ombudsman then there is a risk that the contractor may not be contactable, or even disappear. If this happens then the Ombudsman’s focus will without doubt be on the grower and any action brought either by the employee or by the Fair Work Ombudsman will have to focus on the grower as there will simply be no trace of the contractor.

Where there has been a breach of the Fair Work Act, section 550 of the Act allows an action to be brought against a party “up the chain” if that party has in any way, been knowingly concerned with the breach. This means that if a grower knows what is going on, assisted, helped or facilitates the breach then the grower will be liable for that breach under the Act.

In 2013 the Federal Circuit Court in the case of Fair Work Ombudsman v South Jin Pty Ltd [2013] FCCA 1057 accepted that section 550 of the Fair Work Act allowed the Ombudsman to pursue a complaint against supply chain participants who are not direct employers. This claim related to underpayment of trolley collectors totalling approximately $160,000.

In 2012 Coles Supermakets Australia Pty Ltd was sued by the Ombudsman in a claim that also related to the underpayment of the trolley collectors for an amount of approximately $200,000. Coles accepted liability for compliance with workplace laws by contractors. The matter was settled on this basis and the proceedings discontinued.

The implication for growers is that they must accept that they will face examination and perhaps prosecution for breaches of the Fair Work Act under section 550, even where the breach was as a direct result of the contractor’s actions and not the grower’s.

What do growers need to do? Growers need a formal agreement with their contractor explaining who is responsible for what. This will not absolve a grower from breaches of the Act because section 550 of the Act can be used to prosecute parties “up the chain”. Prudent growers need to take extra action. They need to put in place an audit regime whereby they may audit the contractor to ensure compliance with the Fair Work Act and the Work Health and Safety Act. Growers should also audit contractors to check how they are treating employees. Thought needs to be given as to what the consequences should be of a contractor failing an audit.