Hotel cleaners get $1.9 million back pay

A major Australian hotel chain has handed a total of $1.9 million to more than 1500 of its cleaners after misclassifying them as independent contractors.

A Fair Work Ombudsman inquiry found Oaks Hotels and Resorts had used a subsidiary to pay cleaners on a per-room-cleaned rate - when they actually operated as employees.

Employees are entitled to minimum wage and conditions such as superannuation.

As an alternative to legal action, Oaks and its subsidiary entered an agreement with the FWO to rectify the issue immediately, the FWO says on Wednesday.

The 1502 mostly-foreign workers have now been paid in full for work completed between August 2015 and August 2016.

Ombudsman Natalie James said the outcome highlights the need for lead businesses in Australia to consider the steps they can take to enhance compliance in their supply chains.

"It's not about removing the responsibility of the direct employer - it's about making sure that those at the top aren't unfairly benefiting or turning a blind eye to the impacts on the workers at the bottom," Ms James said in a statement.