Fair Work Ombudsman to work with local councils to improve management of security supply chains

The Fair Work Ombudsman has released the findings of its Inquiry into the procurement of security services by local government, highlighting an opportunity for councils to work with the regulator to improve supply chain governance efforts.

The Inquiry was commenced following industry concerns and intelligence that security employees were being underpaid in the local government sector.

Co-designed with the Australian Security Industry Association Ltd and United Voice, the Inquiry examined the labour procurement arrangements relating to the engagement of security services by 23 local councils across all states and the Northern Territory.

At least one instance of non-compliance was identified in each state. No instances of non-compliance were found in the Northern Territory, where the majority of councils audited directly employed security workers.

Fair Work Ombudsman Natalie James says that the report highlights the important role that organisations at the top of labour supply chains can play in influencing workplace practices and promoting compliance with workplace laws.

"I am pleased that throughout this Inquiry we were able to meaningfully engage with councils, local government associations and industry bodies to provide education around best practice supply chain governance and identify issues that need to be addressed.

"The findings reinforce something the Fair Work Ombudsman has been warning businesses about for some time now: a lack of oversight and accountability on the part of organisations at the top of the supply chain, in this case local councils, can play a significant role in creating conditions that give rise to non-compliance by contractors further down the chain."

The Inquiry found that the 'further away' a business was from the council in the supply chain, the greater the levels of non-compliance: 63 per cent of subcontractors were found to be non-compliant compared to 42 per cent of principal contractors, who had a direct relationship with the council.

Ms James is urging both councils and security companies to take concrete steps to ensure that security officers performing work for local councils were receiving their lawful entitlements, emphasising that her agency was always on hand to provide assistance with workplace compliance.

The Inquiry report sets out a series of recommendations for councils and contractors aimed at improving compliance at all levels of the supply chain.

"We're recommending that local councils amend their security services tender documents to reflect best practice on contracting labour and ensure that the amounts paid in their contracts are sufficient for contractors and subcontractors to cover employee entitlements.

"We also expect that councils are proactive in monitoring their security supply chains, including by requiring contractors to regularly report on their compliance with their workplace obligations.

"Beyond such measures being in line with community expectations, councils should note that it is not just employers who can be held liable for breaches such as underpayments occurring in a supply chain – in certain circumstances councils themselves may be held legally responsible when their contractors or subcontractors are not complying with the law."

Ms James says that to ensure accountability, her agency will continue to monitor to check the issues identified in the report and may conduct future inquires.

"We welcome cooperation from local councils, contractors and industry bodies to address the compliance and governance issues identified by this Inquiry and work with us make improvements going forward," Ms James says.