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LEGAL | Staff Reporter, Australia
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Pizza Hut outlets in hot water over workplace breaches

Widespread non-compliance with workplace laws was found within Pizza Hut outlets.

The Fair Work Ombudsman Activity Report commenced in November 2015 and focused on the engagement of delivery drivers. The FWO audited a total of 34 franchisees of which, 32 engaged delivery drivers. Audits have been finalised with respect to 26 of the franchisees who engaged drivers while inquiries into the remaining six franchisees are ongoing.

According to the report, of the 26 completed audits, 24 franchisees (92 per cent) were found to be non-compliant with only two franchisees found to be meeting all of their legal obligations.

Of the 24 non-compliant franchisees, the activity found that seven had misclassified delivery drivers as independent contractors rather than as employees. Furthermore, 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 awardor failing to increase rates in line with Fair Work Commission minimum wage decisions.

The FWO is issuing three enforceable undertakings to different franchisees to address the issues, as well as issuing 11 compliance notices to franchisees for underpaying employees and recovering a total of $12,086 in wages.

Eleven infringement notices were filed for a range of record keeping contraventions, which equate to a total of $6,300 in fines. The FWO is also issuing 17 formal letters of caution to franchisees requiring action to rectify non-compliance identified within their individual outlets.

In addition, the FWO is considering potential litigation with respect to one franchisee.

Given 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.

Fair Work Ombudsman Natalie James said people 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,” James said.

“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."

“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,” James said.

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