Pizza Hut outlets breaching workplace laws: Report

by John Hilton27 Jan 2017
Three quarters of audited Pizza Hut outlets are failing to comply with workplace laws, according to a Fairwork Ombudsman Activity report.

Of the 34 franchisees audited by the Ombudsman, 24 were found to be breaching workplace laws while only two were meeting all of their legal obligations to delivery staff.

The audit found two franchises in Sydney and one in Brisbane paid drivers just $5.70-$8 on a per-delivery basis and they all did not issue pay slips.

Of the 24 non-compliant franchisees, the activity found:
  • Seven had misclassified delivery drivers as independent contractors rather than as employees;
  • A total of $12,086 in underpayments was owed to workers, mainly for underpayment of minimum hourly rates and allowances such as laundry; and
  • Some underpayments were a consequence of the franchisee applying the wrong award or failing to increase rates in line with Fair Work Commission minimum wage decisions.
Fair Work Ombudsman Natalie James said those employed as delivery drivers are often very young, making them more vulnerable to exploitation in the workplace.

“Thirty-two per cent of the 170 workers we dealt with as part of this Activity Report were under the age of 24,” said James.

“We know that younger people, who have less experience in the workplace are more likely to be unaware of their rights.

“Through the course of our Activity, we found a number of outlets engaging drivers as independent contractors rather than employees. In some instances, drivers were paid as little as $5.70 per delivery while also being made to cover fuel and vehicle operating costs.”

James added that the FWO will continue to monitor Pizza Hut outlets and will follow up with those identified through this process to ensure that areas of non-compliance are being addressed.

The FWO is addressing these issues by:
  • Issuing three enforceable undertakings to different franchisees
  • Issuing 11 compliance notices to franchisees for underpaying employees
  • Recovering a total of $12,086 in wages;
  • Issuing 11 infringement notices for a range of record keeping contraventions. The infringement notices equate to a total of $6,300 in fines; and
  • Issuing 17 formal letters of caution to franchisees requiring action to rectify non-compliance identified within their individual outlets.
Moreover, the FWO is considering potential litigation with respect to one franchisee.

Due to the extent of non-compliance with respect to arrangements for delivery drivers, preliminary discussions relating to a proactive compliance partnership have been held with the owners of the Pizza Hut franchise.

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