The massive industry in which companies pretend to have no employees
Tuesday, 14 June 2022
The Government’s proposed “fair pay agreement” laws could result in the entire commercial cleaning industry pretending to have zero employees, MPs have been told.
Dominic Drumm, owner of Westferry Property Services in Auckland, said he was competing with rivals that employed their cleaners as “contractors” allowing them to pay them less than he pays the people he employs directly.
The Government is pushing to introduce fair pay agreement laws, which would allow for industry-wide minimum pay and conditions.
But Drumm told MPs on the Education and Workforce Select Committee on Monday that the Government’s proposed Fair Pay Agreements Bill would make the problem worse because it was written only to cover employees, not “contractors”.
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**
If it was not changed to cover dependent contractors, the minority of companies like his, which employed cleaners directly, would be forced to move to the contractor model, or the related “franchise” model, or go bust.
“The logical end-point to this is there won’t be any employees in our industry. They will all be contractors and franchisees,” he said.
That threatened to worsen conditions for workers for whom a cleaning job was the first step towards escaping poverty, he said.
Sarah McBride, chief executive of BSCNZ, the commercial cleaning industry association, said the worst “horror stories” from the franchise and contractor models included people earning just $7 to $8 an hour.
“That kind of behaviour is ruining our industry,” she said.
Out of the 12,900 registered commercial cleaning companies, 8823 had workers who were not classified as employees, and would not be covered by fair pay agreements, she said.
“For anyone to claim that fair pay agreement legislation as it is written will cover the entirety of our industry is a blatant mistruth,” she said.
She said 80% of the cost of a contract was labour costs.
“On a weekly basis my members tell me they are losing contracts to these other business structures because they come in 30% to 50% cheaper than they, who directly employ,” she said.
Nam Tran came to New Zealand from Vietnam in 2019 to do a master’s degree.
After he finished, he struggled to find work, eventually landing a job as a cleaner, or “housekeeping associate” in a high-end hotel chain.
“The work was heavy, some days it was quite brutal,” he told the select committee.
“Our actual working hours were 8am to 4.30pm on weekdays, which seems quite reasonable until you found out that if you wanted to do your job properly, you would have to arrive at work somewhere around 7am, and leave 5pm, maybe 6pm.”
Every day, the housekeeping associates were given an impossible number of rooms to clean, equipment often broke down, and often cleaning supplies were inadequate.
“When we raised these problems to our managers, the answer was always the same. The company was short of money.”
“They were constantly short of money,” he said.
He was paid minimum wage of $20.10 per hour when he started, and after several months was paid the living wage, then $22.10.
Eventually he found a job in a cafe at AUT, where he was paid more, which he puts down to a strong union presence at the university. Nam said he was now a lecturer at AUT.
He said he decided to speak with the select committee to fight for a fairer deal for his co-workers.
“They were the only ones who made the job tolerable for me to work there,” he said.
He said people saw the minimum wage as being a punishment for people who were too lazy, or incompetent, to find better jobs.
“But the people working there were all smarter, and more hard-working than me,” he said.