The Fair Work Ombudsman has launched a preliminary investigation into claims guards subcontracted by a Canberra security firm were underpaid for work at ACT government events.
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The ACT government has paid SNP Security Canberra at least $1.5 million in the past six months for security at events including Floriade, cricket matches and Raiders games.
But a whistleblower told Fairfax Media SNP Security subcontracted some of its events work onto a smaller security firm, Phuture Group, which paid some of its workers below award rates with no entitlements.
A spokesman for the Fair Work Ombudsman said the ombudsman received intelligence through their anonymous report tool in relation to the Phuture Security and is conducting "preliminary inquiries".
The allegations of underpayment have been strenuously denied by the head of Phuture Group, Shane Tipa, and Fairfax Media has not been able to verify their accuracy.
Fairfax Media makes also no suggestion SNP Security knew of the allegations against Phuture Group.
However the arrangement has placed scrutiny on SNP, one of five security firms the territory government has active contracts with.
A spokesman for workplace relations minister Rachel Stephen-Smith said the union for security guards, United Voice, wrote to her in December last year saying the allegations against Phuture Security had been raised with them and that the company had been working at ACT government events.
"As Phuture Security was not contracted by the ACT government, subsequent conversations between the directorate and the union revealed an allegation that SNP had subcontracted some of its ACT government events work to Phuture Security," the spokesman said
He said the government contract with SNP contained clauses that stated they had to seek approval from the ACT government before subcontracting.
"To date, the ACT government has not received any request from SNP to seek approval for any subcontracting work," the spokesman said.
"Due to the seriousness of these allegations, the ACT government has now requested a further meeting with SNP to discuss these concerns and to reconfirm that all workers are receiving the appropriate conditions for their work."
But in a statement to Fairfax Media, SNP Security said as a privately-owned Australian company, it "retains the right to subcontract services to third parties".
The company declined to say which events it had contracted Phuture Group to work at in the past 12 months, citing "commercial reasons".
"SNP has had no formal notification that any of our subcontractors are under investigation however if this changes we will act on it accordingly," their statement said.
United Voice secretary Lyndal Ryan told Fairfax Media subcontracting was "rife" in the ACT security industry.
"I was speaking to a security officer at the Multicultural Festival about the penalty rates campaign, and he said 'I'm lucky because I'm directly employed by SNP but there are other guards here that aren't'."
Ms Ryan said many security companies are forced to subcontract to compete, as clients demand cheaper and cheaper services.
"Clients often don't understand what they're purchasing.They can have a big multinational name, all of the guards badged up in their uniform, but in fact they're not employed for that contractor at all, they will be subcontracted sometimes multiple times," Ms Ryan said.
"It actually becomes the business model. It is a race to the bottom. [It's] part of the black economy and really it's a con job in every way."
Ms Ryan said subcontracting arrangements were open to exploitation and the only way to stop it was to stamp the practice out.
However the spokesman for Ms Stephen-Smith said government contracts contained adequate provisions to protect security guards.
He urged any worker concerned they are not receiving their full entitlements from their employer should contact the Fair Work Ombudsman on: 13 13 94.
