Escarpment Group busted taking half staff wages

In Attractions, Australian Domestic Tourism, Government, Harmonisation, National Headlines, New South Wales

Luxury hoteliers The Escarpment Group have been caught taking half of their migrant workers’ pay in a Sun-Herald investigation. Multiple payslips have been forged and workers forced to pay $480 pw for shared rooms under a 407 training visa scheme facilitated by Australian Internships.

TTN 8th July 2019

Photo: The Convent Hunter Valley was raided last month. Top right: the sleeping quarters, top left, hours worked.

See below the two different aspects of the story; the widespread abuse of workers by The Escarpment Group, and more detail on how Australian Internships signed up international hospitality aspirants then changed the goal posts, forcing them to sign contracts that allowed Escarpment to take cash directly out of their wages. The debit was not always recorded.

The Fair Work Ombudsman weren’t much help – workers seeking help were palmed off to Legal Aid, who sent them with forms back to Fair Work.

Luxury Blue Mountains hotel group clawing back wages from migrant workers

The Department of Home Affairs and the Fair Work Ombudsman are investigating a luxury Blue Mountains hotel group after a Sun-Herald investigation found it is clawing back wages from migrant workers through overpriced accommodation and unpaid overtime.

The Escarpment Group owns Lilianfels and Echoes in Katoomba, the Hydro Majestic in Medlow Bath, the Parklands Country Garden and Lodges in Blackheath and the Convent Hunter Valley. The Fair Work Ombudsman (FWO) raided the group’s operations in Katoomba and the Hunter Valley last month.

A 14-month Sun-Herald investigation has found the Escarpment Group forces workers on 407 Training Visas to return $480 out of their wages each week to their employer for a shared bedroom and meals that are not always provided. Employees are also not paid for up to three hours of overtime they work each day.

The migrant staff who worked at the group’s properties said these conditions made them feel like “prisoners”. Most workers interviewed by The Sun-Herald did not want to be identified because they feared reprisals. One said: “For me I am in a first world country working in third world [conditions].”

The Sun-Herald investigation found the compulsory room and board charge is automatically deducted from staff wages and is $60 more than the workers would pay to rent an entire house in the same Katoomba/Blackheath area. The so-called interns are also asked to sign time sheets that record 38 hours of work a week instead of the up to 50 hours they actually work. The 12 hours of unpaid overtime are recorded on a second set of handwritten time sheets and rosters.

Exploitation of visa workers

Former hotel staff, Awindam Biswas describes how he was exploited by the hotel chain he worked for.

The Escarpment Group denied “underpaying or exploiting” any of its employees or interns, including those on 407 visas. It said it was being investigated by the Department of Home Affairs and Fair Work.

“Escarpment Group is co-operating with that investigation and believes that it has acted in accordance with the applicable industrial laws,” a company statement said. “The investigation is continuing, therefore it would be inappropriate to make any further comment at this time.”

The Fair Work Ombudsman (FWO) also refused to comment on its ongoing investigation. The Department of Home Affairs referred inquiries to Australian Border Force, which said it could not comment as the matter was part of an ongoing investigation.

However, a Home Affairs spokesperson said 407 visa holders have the same rights under workplace law as Australian citizens and it “takes any allegations of misuse of a visa or exploitation of a visa holder seriously”.

Professor Allan Fels.
Professor Allan Fels. CREDIT:ALEX ELLINGHAUSEN

Professor Allan Fels who chaired the Migrant Workers’ Taskforce, which reported to the Morrison government in February, said The Sun-Herald investigation revealed the practice of underpayment “is still pervasive”. He said the government had adopted all his recommendations including jail sentences for serious wage theft, but “speedy implementation” was now needed.

Professor Fels said the hotel group’s conduct was “an important example” that showed exploitation was not confined to foreign students and working holidaymakers who were the subjects of his inquiry.

“It covers other categories of temporary migrant workers,” he said. “It looks to be highly exploitative, highly calculated and a deliberate attempt to break the law.”

The Sun-Herald interviewed nine Escarpment Group hotel workers in Katoomba and examined the employment records of seven on the 407 Training Visa including copies of their pay slips and time sheets which recorded 7.3 hours of paid work per day and 38 hours a week. Signed handwritten time sheets and rosters showed they worked up to 11 hours a day.

Australian citizens who worked at the hotel said they were paid properly but were concerned their co-workers on training visas being underpaid and forced to live in overpriced accommodation.

Payslips The Sun-Herald has seen record 76 hours of work per fortnight and do not record the automatic $960 fortnightly deduction for rent. This charge only shows up on their bank statements. Pay slips from last year show the $960 deduction.

After the rent is taken out of their wages, the interns are left with a net salary of about $16,000 plus $5000 in superannuation – about $300 in their pocket each week.

Employment lawyer Sharmilla Bargon from the Redfern Legal Centre said employers have a legal obligation to keep accurate time sheets and wage records, and payslips that reflect the total number of hours worked. She said an employer should not generally take money out of an employee’s wages, but if they did, the amount “should absolutely be recorded on the employee’s payslip”.

“If this amount isn’t recorded, the employer may have contravened employment laws,” she said.

The Sun-Herald first contacted FWO about the Escarpment Group of hotels in March alerting it to allegations that visa workers were forced to live in overpriced accommodation, but it had nothing to report. Then, last month, it confirmed it was investigating the group and had audited its hotels in Katoomba and the Hunter Valley. It refused to comment further on the investigation.

The Sun-Herald can reveal the FWO has been contacted by at least two of the hotel workers who have evidence of pay slips, rosters, bank records and two sets of time sheets, one with correct times and the other with false times. The workers said they were told to call Legal Aid instead. Legal Aid then provided forms to send to the Fair Work Ombudsman.

“Their advice wasn’t very helpful and they did not understand our situation. That was very disappointing,” one said.

The Fels report noted the FWO needed to have a stronger profile with migrant workers and a “stronger enforcement response”.

While Australian workers might experience underpayment, Professor Fels said they “are not typically exploited over accommodation”.

“The foreign worker coming here is much more exploitable because of their lack of personal supports, their non-access to accommodation, their poor knowledge of the law, the unlikelihood they will report the offender for fear of losing their working rights,” he said.

Do you know more? Contact Anna Patty: apatty@smh.com.au

Promise of training with luxury hotel group entraps visa workers

Every fortnight, Arindam Biswas watched as his boss deposited $1626 into his bank account. Then like clockwork, more than half his fortnightly wages disappeared – reclaimed by his employer as rent for a shared bedroom.

Until late last month, Biswas, from Kolkata, India, was a desk clerk at one of Australia’s most prestigious hotels, the Hydro Majestic in the Blue Mountains. Still shiny from a $30 million facelift, it is part of a luxury hotel chain known as the Escarpment Group, which includes Lilianfels and Echoes in Katoomba, Parklands Country Garden and Lodges in Blackheath and the Convent Hunter Valley.

Arindam Biswas worked in hotels in Switzerland and the United States before Hydro Majestic.
Arindam Biswas worked in hotels in Switzerland and the United States before Hydro Majestic.CREDIT:WOLTER PEETERS

Biswas was part of the Escarpment Group’s churn of cheap labour from countries including India, the Philippines and Vietnam who come to Australia on a 407 Training Visa and are exploited through long hours of unpaid overtime and inflated rents. Experts including the head of the Morrison government’s Migrant Worker watchdog Allan Fels warn the exploitation is going unchecked.

The workers pay more than $6600 for a 52-week internship and are forced to share a small bedroom that their employer rents to them. At $480 a week, the shared room costs $60 more than the market rate for an entire house in the Blue Mountains. It’s also more than the $422 charge for a Saturday night stay at the Hydro Majestic in a heritage room with breakfast.

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Employee pay slips, seen by The Sun-Herald, recorded the $960 fortnightly deduction until last year, but it does not appear on pay slips issued this year. Now, the only official record appears on employees’ bank statements.

Workers who ask to move out of the accommodation say they are threatened with the termination of their contract and visa.

And while their handwritten time sheets and rosters, seen by The Sun-Herald, show they work up to 50 hours each week, a second set of time sheets they are asked to sign record only 38 hours of work per week. Any overtime is unpaid.

Payslips no longer document the $960 fortnightly rent deduction as required under workplace laws.
Payslips no longer document the $960 fortnightly rent deduction as required under workplace laws.

The Sun-Herald has interviewed at least nine people who have worked for the Escarpment Group of hotels since April last year and has examined the pay slips and time sheets of seven who came to Australia from overseas on the promise of on-the-job training who felt like “prisoners”. They were too scared of reprisals to be identified, but one said: “For me, I am in a first world country working in third-world [conditions]”.

A fortnightly $960 rent payment is automatically deducted from wages but does not appear on payslips.
A fortnightly $960 rent payment is automatically deducted from wages but does not appear on payslips.

In a statement, the Escarpment Group says it is under the investigation of the Department of Home Affairs and Fair Work and denies underpaying or exploiting any of its employees or interns, including those on 407 visas.

“Escarpment Group is co-operating with that investigation and believes that it has acted in accordance with the applicable industrial laws,” the statement said. “The investigation is continuing therefore it would be inappropriate to make any further comment at this time.”

The Hydro Majestic Hotel in Medlow Bath in the Blue Mountains.
The Hydro Majestic Hotel in Medlow Bath in the Blue Mountains.CREDIT:WOLTER PEETERS

Employment lawyer Sharmilla Bargon from the Redfern Legal Centre says employers have a legal obligation to keep accurate time sheets and wage records. They are also required to provide pay slips that reflect the total number of hours worked. And any deductions from wages should “absolutely” be recorded.

“If an employer is found to have falsified work records, a court can order them to pay significant penalties of up to $63,000 for each contravention,” Bargon says.

Andrew Stewart, a professor of law at the University of Adelaide, said it was possible that a deduction for food and lodging could be reasonable, but it had to be for the employee’s benefit and at a reasonable cost. “If they are being forced to stay in particular accommodation, it throws up all kinds of red flags in terms of restrictions in the Fair Work Act,” he says.

Lilianfels Hotel in Katoomba
Lilianfels Hotel in KatoombaCREDIT:WOLTER PEETERS

The union that represents hospitality workers, United Voice, says the industry award requires that no more than $204.12 be deducted from their salary each week for a shared room and three meals a day. The union said the high dollar amount and compulsory nature of the accommodation provided by the Escarpment Group “warrants further investigation”.

No scope for savings

Earlier this year, Biswas, 28, who earned his Masters degree in international hospitality business management in Switzerland – came to Australia on the 407 visa for an employment contract that promised him a base salary of $51,648, plus 9.5 per cent superannuation.

He was shocked when the company required him to share a very small bedroom with another person and then took $480 a week out of his salary for rent and food. It left him with about $330 a week in his pocket, not enough to start paying off his student debts.

“I have friends who have worked at hotels in Australia who saved three times as much as me,” he says. “I am sure I am the most underpaid front desk agent in the country. I am not saving anything.”

Biswas paid Australian Internships $6635 for the 52-week internship program, including $1120 for insurance and $955 for his visa costs. The Australian government charges $310 for a 407 visa.

No dollar amount for rent or food was mentioned in Biswas’s internship contract or those of other workers who showed them to The Sun-Herald during interviews in Katoomba. The contract signed by the Escarpment Group and Australian Internships only says the “package includes full boarding – twin share accommodation with three meals daily”.

A photo of Arindam Biswas's bedroom
A photo of Arindam Biswas’s bedroom

Australian Internships informed Biswas of the $480 food and accommodation charge in a separate email after he had paid for his visa application. When he questioned the rent charge, saying he would prefer to make his own arrangements, Australian Internships told him it was not optional: “You are not allowed to change accommodation, it is a package inside of your agreement.” He was later asked to sign a separate form authorising the $480 deduction.

Pay records for other workers who earned less than $50,000 at the Escarpment Group hotels show they also each pay $480 a week for a twin-share room and three meals a day. Rental prices for a three-bedroom house in Katoomba range from about $390 to $450 per week.

They were told the charge was compulsory and warned they would have to terminate their contracts and visas if they moved out.

One of the Katoomba properties owned by The Escarpment Group
One of the Katoomba properties owned by The Escarpment Group CREDIT:WOLTER PEETERS

Some other Escarpment Group employees each pay $250 a week to live in company accommodation. The company owns at least six houses in Katoomba and Medlow Bath, including a nine-bedroom heritage home worth millions of dollars.

One of the meals served to 407 visa workers at the Escarpment Group of hotels.
One of the meals served to 407 visa workers at the Escarpment Group of hotels.

Workers have also claimed that while money was deducted from their salary for three meals per day, many meals were not provided at all and until complaints were raised about the standard of meals late last year, they were usually served leftovers.

“There will be days I miss out on lunch or dinner. I would get about eight or nine [lunch and dinner] meals out of 14 each week,” one worker said. “We never get the time to have breakfast because we have to take it from the buffet after the guests leave, but that is the same time we have to start work.”

Regulations ‘not followed’

While Biswas worked regular hours, other interns say they were working up to 11 hours of unpaid overtime each week, and being asked to sign false timesheets that showed they were working 38 hours a week instead of the 50 hours plus recorded in their handwritten time sheets and rosters. Some workers say they were treated more fairly at hotels in India and the Philippines, where they were paid for regular hours and not required to do unpaid overtime.

“Coming here, I thought it would be better because there are proper laws and regulations in this country, but none of it is followed at this hotel,” one says. “We are working on an average nine hours a day excluding busy days when it is 10 hours and 12 hours, with maybe half an hour break in between …Our contract states we are supposed to work 38 hours with reasonable extra hours. We are working 90 to 100 hours a fortnight without getting overtime.”

Another said: “I work up to 100 hours per fortnight but only get paid for 76 hours. The fortnightly wage remains the same no matter how many hours we work”.

The Sun-Herald has seen copies of timesheets showing seven to eight hours worked each day,  at significant odds with much longer hours recorded on handwritten time sheets.

Biswas, who has worked for hotels in Zurich, Colorado and Vermont, says he personally worked regular hours but his earnings at the Hydro Majestic were half of what he earned in Switzerland and the United States.”I know how people should be treated. When I came here it was a complete shock.”

Other staff, who are Australian residents and not forced to live on site, said they themselves were paid properly at Lilianfels, but shared concerns their co-workers on visas were being exploited. “They are all too scared to say anything because they want the visa even if they are being underpaid or working too many hours,” one says.

Summarily dismissed

When Biswas told the hotel he was planning to resign, he was offered a single room for $250 a week without meals, to stay on. But the offer also meant his annual salary would be cut from $51,648 to $45,664. Australian Internships said the overall difference would amount to “$6016 in savings”. But Biswas was unhappy with the internship and work environment.

Two days before he handed in his resignation on June 22, he complained to Australian Internships about exploitation under the guise of a “training” arrangement. He was summarily sacked on June 25 while working out his notice on the grounds that he had used the office computer to email copies of documents including front-desk duty check lists.

The documents were forwarded to a co-worker who had asked for them to complete a 2000-word assignment for his hospitality course on front-office “roles, duties and responsibilities”. The Sun-Herald has seen the check lists, the assignment question and text messagesbut Biswas said management did not listen when he tried to explain the contents of the email.

“There was nothing in the email like credit card details or revenue details that could compromise the integrity of the hotel or its guests,” Biswas says.

Former Hydro Majestic "intern" Arindam Biswas
Former Hydro Majestic “intern” Arindam BiswasCREDIT:WOLTER PEETERS

Under the terms of the 407 visa, he has 60 days from June 25 to get another visa or to find another employer to sponsor him, to avoid having to return to India.

Jim Angel, a former Blue Mountains councillor of 25 years and mayor for 10, raised concerns about the exploitation of visa workers in the local hospitality industry in a submission to a Senate inquiry into corporate avoidance of the Fair Work Act in 2016.

He told The Sun-Herald that Escarpment Group hotel workers were paid minimum award entitlements, “but the rent paid for accommodation is quite excessive”.

“It gives the whole industry a bad name and the tourism industry is the lifeblood of the Blue Mountains,” he said.

The Escarpment Group's Parklands Country Garden and Lodges in Blackheath
The Escarpment Group’s Parklands Country Garden and Lodges in Blackheath CREDIT:WOLTER PEETERS

A former Escarpment Group hotel worker who now works elsewhere says he was annoyed at the forced accommodation cost, but later thought it was fair as a short-term arrangement because it included costs for utilities and had helped him avoid the need to source a property himself when he first arrived in Australia.

Another Escarpment Group worker says that when he first moved into the accommodation he had no problem with the inflexible arrangement. “In the beginning we thought it was all right, but now we are aware of the law. Forcing us to stay in their accommodation just because we signed the contract because we didn’t know what was happening, I don’t think is right,” he says. “When we speak up they threaten to terminate the contract and visa. We are just here to learn. I wish to leave to go somewhere else.”

Lack of training

The workers also said that official training requirements outlined by Australian Internships (AI) were not properly followed. “We have a training sheet, but we are so understaffed they cannot train us properly,” one intern says.

An AI spokeswoman said concerns about the cost of accommodation and meals had been relayed to Escarpment Group, who have the workplace relationship with interns.

“AI facilitate the relationship between the intern and the Escarpment Group and are not the employer,” she said. “The focus of the AI program is on training and workplace-based learning.”

“Employment-related issues such as wages, accommodation and entitlements are a matter for the Escarpment Group who have the workplace relationship with the intern.”

The spokeswoman said the training agreement signed by AI and the Escarpment Group “is not an employment contract”.

Immigration law expert Joanna Howe, from the University of Adelaide, said there had been little scrutiny of the 407 Training Visa and some employers were using it to undercut the minimum wage through unpaid overtime and inflated deductions on accommodation and food.

“This particular arrangement appears to be using the word ‘internship’ completely fraudulently,” Howe says. “It is an employment package that is exploitative from the start. This undercuts jobs for locals because no local would work under those conditions.”

Biswas says that in his Skype interview for his position, he was promised training in revenue management and broader experience in other areas including reservations at the Hydro, but this had not been provided.

The internship contract does not make it clear the employer will deduct $480 in rent from wages each week.
The internship contract does not make it clear the employer will deduct $480 in rent from wages each week.

Professor Fels who led the Migrant Worker Taskforce urged the government to speedily implement its recommendations, which it accepted in March, in response to unchecked exploitation. His report to the government in February also noted the Fair Work Ombudsman (FWO) needed to have a stronger profile with migrant workers and a “stronger enforcement response”.

The Sun-Herald  first contacted the Ombudsman about the Escarpment Group of hotels in March alerting it to allegations that visa workers were forced to live in overpriced accommodation, but it had nothing to report. Then, last month, it confirmed it was now investigating the group and had audited its hotels in Katoomba and the Hunter Valley. It refused to comment any further on the ongoing investigation.

The Sun-Herald can reveal the FWO has been contacted by at least two of the hotel workers who have evidence of pay slips, rosters, bank records and two sets of time sheets, one with correct times and the other with false times. The workers said they were told to call Legal Aid instead. Legal Aid provided forms to send to the Ombudsman.

Dr Joanna Howe is an associate professor in law at the University of Adelaide.
Dr Joanna Howe is an associate professor in law at the University of Adelaide.

“Their advice wasn’t very helpful and they did not understand our situation. That was very disappointing,” one said.

Professor Howe said the 407 visa “is flying under the radar in terms of policy makers and academics”.

“An internship isn’t just unpaid work. It’s not just work that is normally paid, but you basically do it at a much cheaper rate. A legitimate internship is one where both parties are getting something out of it … That’s not what’s happening here.”

Do you know more? Contact Anna Patty: apatty@smh.com.au

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