LEGAL | Staff Reporter, Australia

Caltex sets up fund for underpaid employees

The company also terminated franchise agreements with 19 franchisees for underpayment.

Caltex Australia Limited announced it will establish a $20 million assistance fund for franchisee employees who have not been paid their full entitlements by Caltex franchisees.

Caltex-initiated workplace audits have uncovered underpayments of entitlements by some franchisees. Caltex declared that it "deplores this illegal and unfair practice and is committed to stamping it out anywhere in its network."

As part of the audit process, Caltex has terminated franchise agreements with 19 franchisees for underpayment or other non-compliance with workplace audit requirements.

The Caltex audit program is ongoing and Caltex will continue to take all necessary action to stop underpayment of franchisee employees. Caltex has reviewed its franchise model and confirmed the model allows franchisees to draw a wage, make a profit, and pay their employees’ lawful entitlements.

The review of the model and the audits undertaken reveal there is no correlation between site profitability and underpayment of franchisee employees.
The responsible franchisees will remain liable for any underpayments to their employees and the Caltex fund will not prejudice the ability of franchisee employees to seek redress from their employers.

Caltex will seek to recover the costs of its fund from franchisees responsible for underpayment of their employees’ entitlements.

The $20 million fund has been established based on Caltex’s assessment of workplace audit data and evidence to date. The fund will allow franchisee employees to claim underpayments for the period from 2015 to date.

When franchisees are exited from the Caltex network, Caltex will invite employees and former employees of those franchisees to come forward if they believe they may have been underpaid.

Since November 2016, an independently-managed, confidential hotline has been in place for franchisee employees to report underpayment issues.

Franchisee employees will be able to make claims within three months of a franchisee exiting the Caltex network or, for franchisees who have already exited, in the three months from 31 May 2017.

The fund will be administered with fair criteria for assessment of claims which will be paid once claims have been substantiated.

To further assist franchisee employees, Caltex seeks to offer employment under Caltex terms and conditions, which observe all workplace laws including wage rates, when a franchisee exits and Caltex takes over operation of a site.

Photo credit: Caltex website

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