Cleanaway Waste Management overhauled its technology systems in March to allow employees to be pushed into “negative” accrued annual leave and pressured workers to use up their entitlements to save cash as the company clawed back 5 per cent of truck driver revenue.
The company’s negative leave strategy, which has the potential to breach the Fair Work Act 2009, is revealed in a secret recording of a meeting held by Cleanaway regional manager Queensland Neil McHugh in mid-April.
The revelations stand in stark contrast to Cleanaway chief executive Vik Bansal’s firm denial last Monday. Asked by The Australian Financial Review whether he had “encouraged your staff members to go into negative leave during this period?”, Mr Bansal said: “No.”
In the mid-April phone hook-up, Mr McHugh outlined a “number of measures” Australia’s biggest waste management group was taking to save money during the coronavirus and meet financial targets set for regional managers.
“Financially, there is a significant gap between where we are and where we need to be. We need to take further action to try and bridge that gap,” Mr McHugh told employees.
According to the recording, Mr McHugh said: “All white collar employees within the business nationally were mandated to take five days leave in the month of April. And that has now been extended to taking that same five days of leave in the month of May, June, and July.”
“The company has extended the annual leave to allow employees to go into a negative 10 day accrual balance, and after that point, once a company employee has reached their negative 10 days, then they effectively have no accrued leave left and they will be without pay,” Mr McHugh said.
For front-line truck drivers, Mr McHugh said the company would be clamping down on overtime by ensuring drivers only worked eight-hour shifts and intended to put “company drivers on RDOs [rostered days off] and having them reduce their RDO accruals”.
“Following use of the RDOs, then we’re looking at putting company drivers on to annual leave. Once we’ve used all our ammunition around overtime, RDOs and leave, then the we go onto a [roster] rotation basis between company drivers and owner drivers [contractors who own their own vehicles].”
He unveiled a plan to deduct 5 per cent from all truck drivers’ invoices from April 20 through June 2020. This meant that drivers would lose 5 per cent of any revenue earned during that time, in a payment from the drivers to Cleanaway. Drivers were later asked to sign a contract variation to allow the deduction to agree to the charge.
This week, the Financial Review revealed Cleanaway also cut contracted rates for Queensland truck drivers by 7.32 per cent from the start of July in accordance with a “rise and fall” clause in their contracts. The company also warned owner-drivers they would be billed for any money they had already received over the new, lower rate. Owner-drivers are paid on a flat-fee rate per cubic metre of rubbish they collect.
Under its contracts with its drivers, Cleanaway is legally entitled to pass on the fall in demand to its drivers, and in the past it has back paid drivers when demand has risen.
As well, some sales staff were also ordered to take 13 days of annual leave before the end of July. However, these staff members said that sales targets were not adjusted lower and employees were still expected to hit their full quarterly sales targets.
Under the law, an employer can ask its employees to take accrued annual leave, but may not direct them to do so except in limited circumstances – such as when workers have amassed a significant amount of annual leave balance. Doing so may be a breach of the employment award or the Fair Work Act, legal sources said. The Fair Work Ombudsman urges any workers who are concerned about their entitlements during COVID-19 to contact the agency directly.
Cleanaway employees have told the Financial Review that Mr Bansal made it clear that “leave management” was the number one priority in the company in April. They also said the human resources system was amended by the IT team in March to allow negative leave balances.
One employee said there were “many people that have had to work during their annual leave” due to the demands of the company, despite the instruction to take holidays. Another said due to the excessive turnover in the business, very few workers had amassed annual leave and there were many pushed into negative balances.
A spokesman for Cleanaway said: “No Cleanaway employee has lost their employment during this period as a result of these external pressures”.
“The active management of significant accrued leave is a normal part of any business, and especially so during a time of crisis and significantly reduced economic activity. It is important to recognise that Cleanaway has not been a recipient of the federal government’s JobKeeper allowance. In that context the actions taken have undoubtedly saved hundreds of real jobs.”
Over the year through June, Cleanaway’s profit after tax fell a slight 6.6 per cent to $112.6 million during the worst economic crisis since the Great Depression.
Since joining as boss in 2015, Mr Bansal has presided over a 300 per cent increase in the share price of Cleanaway, which serves almost 100 local governments, including the City of Sydney and Brisbane City Council, and large corporate clients such as Coles and Woolworths.
This week the Financial Review revealed a formal complaint made in August last year making allegations about Mr Bansal’s “bullying” of staff. It was the third such formal complaint revealed in recent weeks after an investigation by The Australian Financial Review found Mr Bansal was independently probed following a complaint in May alleging a “culture of bullying and harassment” by the boss.
The Financial Review also subsequently revealed an earlier complaint, lodged in March 2019, that went to all Cleanaway board members and top HR executive Johanna Birgersson alleging much of the same conduct.
Current and former employees have said Mr Bansal’s overly-assertive conduct during monthly operational review meetings, where executive team leaders pick through costs and revenue data, often resulted in a situation where senior managers were dressed down for slightly missing financial targets.
While Cleanaway did not disclose the independent probe, which took place in June this year, in Cleanaway’s financial accounts, the company ascribed a 25 per cent reduction in Mr Bansal’s short-term bonus to “COVID-19-related challenges”.
Although Mr Bansal had forcefully denied a link between the STI reduction and the probe —saying “no, no, no, no, no, no, not at all” when asked if there was a connection — the Cleanaway board last week admitted for the first time the CEO’s pay cut was due in part to his “behaviour”.
That admission came after the Australian Securities Exchange probed Cleanaway over Mr Bansal’s sale of $10 million worth of shares late last month, prior to the Financial Review’s revelations of the independent probe. There is no suggestion the share sales were related to the findings of the investigation.
Cleanaway general counsel Dan Last told the ASX the company did not consider the investigation or the report, which was received on July 1, was information that would have a “material effect” on the price of Cleanaway shares.
Cleanaway shares have lost 17 per cent since the revelations in mid-September.
Current and former employees said Mr Bansal’s behaviour was the chief reason for a high rate of manager turnover — including the departure of a half-dozen employees who filled the group’s head of health and safety role over the past four years — and which created an environment where bad news could not be escalated up the chain of responsibility.
Cleanaway is also being investigated by the Environmental Protection Agency in NSW after the agency blitzed 27 Cleanaway facilities in June in an unannounced series of inspections following two chemical spills in Queanbeyan. The federal government’s workplace health and safety agency, Comcare, has also opened a new investigation into Cleanaway.
The Australian Securities and Investments Commission is also examining the company’s disclosure of the independent investigation into Mr Bansal.
Mr Bansal has apologised for the conduct and is now receiving “mentoring” and is subject to “enhanced reporting and monitoring”. He has shared his own improvement plan with the board and following the Financial Review’s reporting has agreed to forgo $2.3 million in performance rights. Mr Chellew earlier this month described Mr Bansal’s conduct as “overly assertive”.
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