Migrant workers employed by one of Australia's major dairy producers, Freedom Foods, are performing tasks not covered under the skilled worker visa scheme, and are being severely underpaid, a union claims.

Key points: Freedom Foods accused of underpaying foreign workers by 25 per cent

Freedom Foods accused of underpaying foreign workers by 25 per cent Company says it is 'unaware' of a single underpayment

Company says it is 'unaware' of a single underpayment Labor says alleged treatment of workers undercuts job market, causes safety issues

The National Union of Workers (NUW) said as many as 57 workers on 457 and 482 visas have been employed as mechanical engineers by Freedom Foods' Shepparton factory, in northern Victoria, since 2016.

The union alleges the workers are not working as mechanical engineers, and are instead doing other jobs on the factory floor.

NUW Victorian leader Neil Smith said these workers, who hail from the Philippines, were being paid about $24 an hour — about 25 per cent less than their local peers — which is "well below the industry standard".

"If these people were to be employed as technical engineers, or mechanical engineers, they would be on something in the range of $40 an hour," Mr Smith said.

Labor spokesperson for workplace relations, Lisa Chesters, said underpaying staff can help businesses to gain a competitive advantage by undercutting the local job market.

"If you are paying these workers 25 per cent less, as is being suggested … we need Fair Work to investigate and to expose if that's the case," she said.

"[If that is the case] you do get a competitive edge over your competitors who are doing the right thing."

Freedom Foods 'not aware of any underpayment'

Freedom Foods has responded to the union's allegations in a statement to the ABC:

Freedom Foods takes seriously its workplace obligations with respect to all its workers, including those on working visas. The company continues to abide by all laws applying to its operations and visa workers. Despite union allegations, Freedom Foods is not aware of any underpayment of a single visa worker. Freedom is disappointed that the National Union of Workers has taken this course of action at the company's Shepparton operation when a new Enterprise Agreement covering all workers, including those on visas, was agreed to overwhelmingly last week by workers, signed off on by the union and approved by the Fair Work Commission.

The Freedom Foods factory at Shepparton. ( ABC Rural: Warwick Long )

Freedom Foods has also accused unions of performing 'phantom' work safe calls to slow down work at the factory in protest the hiring of foreign labour.

Ms Chesters said she was "not surprised the company's come back with those sorts of accusations."

"If you've got people who are here on a visa, who know that they're being underpaid, that is going to create tension on the site," she said.

"It does make it very hard for them to raise safety issues.

"Where you have almost 50 per cent of the site here on a visa arrangement, they're less likely to raise safety issues, because they could be out the door.

"Their entire existence in this country is beholden to the employer."

Complaints date back years

The union said it contacted the Federal Member for Murray, Damian Drum, to raise this issue in 2016.

Mr Smith said in the last month Mr Drum had cancelled two meetings.

Unions are unhappy they have not been able to work with Nationals MP Damian Drum. ( ABC Rural: Warwick Long )

"After a meeting with Damian Drum [in 2016] he called the company and the company said there was nothing wrong here," Mr Smith said.

"That's how he's dealt with the issue."

He said the union had contacted Fair Work and the Department of Immigration but failed to receive a response.

"We've had to go to Fair Work to try and get non-member records, to see what their pay rates are," Mr Smith said.

"And the company have blocked that every step of the way,"

The Union also said workers were discouraged by the Shepparton facility to speak to the union about their work conditions.

"Freedom Foods are in breach of Australian law where they've told these workers … if they talk to the union they'll be going on a plane," Mr Smith claimed.

The ABC contacted the Minister for Immigration, David Coleman, and Mr Drum, but did not receive a response prior to deadline.