- There are significant benefits for a company at the top of a supply chain in taking responsibility to ensure that contracts throughout the supply chain meet minimum employee entitlements, including avoiding financial penalties and damage to reputation.
- On 7 October 2014, a major supermarket chain accepted ethical and moral responsibility to require compliance with workplace laws in its supply chains in relation to trolley collectors. It entered into an enforceable undertaking with the Fair Work Ombudsman, setting an example to other industry participants.
How far down the supply chain does legal responsibility extend? In Australian workplaces, increasingly we are seeing labour-intensive jobs outsourced to low-skilled workers. Employers are not recruiting directly, but sub-contracting out their services to manpower providers. Cleaning, security and trolley collecting are notable examples.
In these highly competitive industries, business competes for contracts and the profit margins are low, particularly on the labour component
Outsourcing can be an entirely legitimate and cost-effective practice provided that those managing the supply chain are not unwittingly – or worse, deliberately – sanctioning the exploitation of workers on their premises by accepting contracts that make it impossible for sub-contractors to pay their staff minimum wages and entitlements.
This raises the question: if an individual or company is involved in procuring services, where the cost is lower than seems reasonable taking into account the market and the industry, could they be at risk of breaching workplace laws?