Ten causal workers employed by Melnor Security Services Pty Ltd were paid flat rates of $26 to $28 an hour during their work at the festival, which a Fair Work investigation revealed to be under their minimum entitlements, as a part of their award.

Depending on the employee’s levels, they should have been paid penalty rates up to $43.85 an hour for night, weekend and overtime work.

The 10 guards were underpaid a combined sum of $5877.92, with one employee missing out on a total of $1252.

The Fair Work Ombudsman started its inquiry in June 2015.

Melnor cooperated with the investigation and “promptly reimbursed the security guards all money owed,” and agreed to apologise to the workers involved, the Ombudsman said.

Tamworth Regional Council (TRC) contracted Melnor to provide crowd control security at the festival in January 2015.

The Leader understands Melnor was contracted for security at the 2014 and 2016 festivals as well.

TRC corporate and governance executive manager Robert Charlesworth said Melnor were “evaluated as the best for the job on a number of criteria” in Council’s procurement process.

Mr Charlesworth said the company had done a good job on previous contracts and also offered a “competitive price”.

The underpayments were discovered when inspectors audited Melnor as part of a ‘Local Government Procurement Inquiry’.

“The inquiry is testing whether there are any links between poor governance in the supply chain and non-compliance with workplace laws,” Ombudsman Natalie James said.

The company has entered into and “Enforceable Undertaking (EU)” to encourage “behavioural change and future compliance”.

The EU also means the company will commission retrospective and future audits of its payment practices and rectify any other underpayments.

“Organisations engaging low-cost security contractors need to ask questions to ensure low costs are the result of efficient business practices and not employee underpayments,” Ms James said.