Coles says it is auditing poultry company Baiada and would seek “corrective action” if it found evidence of unfair practice.
Coles revealed the audit at a Senate hearing in Adelaide on worker exploitation of temporary work visa holders.
The Senate hearing follows a Four Corners investigation in May that revealed temporary work visa holders were being exploited by labour hire firms.
A further investigation by the Fair Work Ombudsman of poultry producer Baiada, which retails under the Steggles and Lilydale brands, found that in some cases, workers weren't paid, paperwork went missing or was forged, and phantom companies were used.
Coles said it had hired PricewaterhouseCoopers (PwC) to undertake its own internal audit of its suppliers in response to the findings.
The retailer told the inquiry the audit sought to identify suppliers who were mistreating workers, and would take "corrective action".
Coles said, however, it would first seek improvements before terminating any contracts.
Senate Standing Committee on Education and Employment chairwoman Sue Line, however, said a raft of evidence from the inquiry and the Fair Work Ombudsman has already been produced to show workers at Baiada were being underpaid, and questioned why the discussions between Coles and Baiada had to remain confidential, according to an ABC Online report.
Senator Deborah O'Neill also asked Coles what actions it had taken to ensure the staff at PwC conducting the audit had the right language skills to speak with employees that did come forward.
Coles government and industry relations manager Vicki Bon said the retailer was “not in a position, and nor would we, arbitrarily terminate a supplier's contract”.
"We are not conducting secret talks. What we're doing is independently auditing the work practices of our suppliers, not just of Baiada," she said.
She also said the final report from PwC would be confidential.
Aussie Farmers Direct recently stopped stocking Baiada's Lilydale chicken on the back of the claims.
