Hardly chicken feed: Poultry producer Baiada to pay $500,000 back to workers underpaid by subcontractors

The company behind Steggles and Lilydale chicken brands has agreed to pay back current and former workers that were underpaid by subcontractors to the tune of half a million dollars.

Baiada Group’s Baiada Poultry Pty Ltd and Bartter Enterprises Pty Ltd, the country’s biggest producer in the Australian poultry market, has agreed to set aside the $500,000 figure for current and former workers found to have been underpaid from the start of the year.

The Fair Work Ombudsman uncovered evidence of unlawful practices and exploitation in June, following complaints that workers, many of whom were on 417 working holiday visas, were being underpaid by subcontractors and forced to work long hours at several processing sites in New South Wales.

The practices have also been the subject of investigative reports by ABC programs Four Corners and Lateline.

Fair Work Ombudsman Natalie James said in a statement today she is pleased the Baiada Group has signed on to a three-year Proactive Compliance Deed, as well agreeing to back-pay the workers.

In the deed, Baiada has acknowledged it has a ‘moral and ethical responsibility’ to address unlawful practices revealed as part of a recent investigation into the business’s treatment of the workers.

“Over the life of the deed, Baiada has agreed to assume responsibility for the underpayment of workers engaged in its supply chain through contract labour arrangements, even though it is not their direct employer,” James said.

Baiada managing director Simon Camilleri said in a statement the company is committed to implementing the compliance deed.

“We will closely monitor the effectiveness of these measures and will act to terminate agreements with contractors who do not comply,” he said.

Rachel Drew, partner at TressCox lawyers, told SmartCompany this morning the action of the Fair Work Ombudsman is connected to section 550 of the Fair Work Act, which states an employer can be held responsible for a contravention of the act by others in the supply chain, including sub-contractors.

“In this case Baiada had a complex but lawful system for engaging labour,” she says.

“The system involved various levels of subcontractors who engaged or provided labour on a labour-hire basis.”

Drew says in this case, the breaches of the act relate to the underpayment of workers made by subcontractors of Baiada.

“However, because of liability and the Fair Work Act, the Ombudsman has been able to require engagement of Baiada in their investigation and has been able to convince them that even though they were not employer of underpaid works, that they were at risk of being liable for those underpayments,” she says.

“Baiada is not the first or only company to be drawn into underpayments by subcontractors. The arrangements it had were completely lawful, it was the subcontractors not paying correctly.”

Drew says the Fair Work Ombudsman has very broad powers to investigate and prosecute under the circumstances involved in this case and, despite it being the subcontractors that underpaid workers, it is in the chicken producer’s best interests to take such steps.

“Baiada’s actions in resolving this though the Proactive Compliance Deed with the Ombudsman are very sensible,” she says.

Not taking such action could have led to further legal action on behalf of the Ombudsman, Drew says.

“It is open to the Fair Work Ombudsman to commence court action against employers which were the subcontractor of Baiada and to commence court action against group itself,” she says.

Drew says the public perception of the company is “very important “and there is a stigma attached to companies believed not to be complying with workplace responsibilities.

“It is very important for Baiada, given not the employer and not underpaying, but extremely important for Baiada to be part of the solution here,” she says.

“Cooperation with the Ombudsman is absolutely essential for their reputation.”

SmartCompany contacted Baiada but did not receive a response prior to publication.