The Fair Work Ombudsman today announced it is taking legal action after finding four cleaners at Woolworths supermarkets in Tasmania were allegedly short-changed as a result of contractors and sub-contractors flouting workplace laws.

The Ombudsman said it has been investigating Woolworths’ arrangements for cleaners at its Tasmanian supermarkets since September, 2014 and the findings are expected to be published late this year. It is alleged that the cleaners were short-changed over $21,000.

In its latest proceedings, the Fair Work Ombudsman is taking Federal Circuit Court action against major national cleaning company Pioneer Facility Services Pty Ltd, which formerly held contracts with Woolworths to provide cleaning services at numerous supermarkets throughout Australia, as well as a subsidiary company, Pioneer Contracting Services Pty Ltd.

Also facing Court is Sung Gun Hwang and his company OzKorea Pty Ltd, who formerly sub-contracted to provide cleaning services at four supermarket sites in Tasmania at Deloraine, Georgetown, Riverside and Mowbray.

Hwang and OzKorea allegedly directly employed and underpaid the four workers, including three Korean nationals, between January, 2014 and January, 2015.

The Fair Work Ombudsman alleges that Pioneer Facility Services and Pioneer Contracting Services were accessories to the underpayments because they knew or should have known the sub-contract prices were not sufficient for Hwang and OzKorea to meet minimum employee entitlements.

Pioneer Facility Services and Pioneer Contracting Services allegedly made no effort to check whether Mr Hwang and OzKorea paid their employees correctly.

The underpaid workers, including young international students aged under 20, allegedly received flat rates of $14 to $15 an hour.

Under the Cleaning Services Award they were allegedly were entitled to be paid $22 to $23 for normal hours and penalty rates ranging from $26 to $47 for weekend, overtime and public holiday work.

Hwang allegedly provided Fair Work inspectors with false time-and-wages records purporting to show employees had been paid higher rates than was actually the case.

OzKorea faces maximum penalties of up to $54,000 for some contraventions and $27,000 for others and Hwang faces maximum penalties of between $5400 and $10,800.

A directions hearing is listed in the Federal Circuit Court in Hobart on August 4.

Ombudsman Natalie James flagged in a keynote address late last month that she would use “all the levers available to us to protect vulnerable workers at the bottom of supply chains”.

“Outsourcing is a legitimate business arrangement – but in my experience, in highly competitive markets for low-skilled work, it also increases the risk that workers will be underpaid, sometimes quite deliberately,” James said.

A separate Inquiry into the procurement of trolley collection services by Woolworths has finished and the findings and recommendations will be published shortly.

Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.