A Fair Work review of 22 Subway franchisees has found the vast majority of these businesses owed money to their employees, with the ombudsman expressing frustration at low rates of compliance.
The Fair Work Ombudsman (FWO) said in a statement that its inspections of the 22 Subway franchises across NSW, Victoria and Queensland had culminated in $81,638.82 being repaid to 167 workers who were found to have been underpaid.
It followed anonymous tip-offs and worker requests for assistance, the FWO said.
Of the 22 franchises examined, 18 were found to have breached workplace laws, including a failure to meet minimum wages.
Other breaches included inadequate record keeping, underpayment or non-payment of penalty rates and casual loadings, and not issuing proper payslips to employees.
The FWO issued nine fines on the spot for payslip breaches, collectively totalling $5,880. Additionally, a further nine formal cautions were issued about non-compliance, along with seven compliance notices demanding franchisees rectify breaches.
According to the regulator, it brings the total amount of underpaid employee entitlements reimbursed to Subway employees over the past two financial years to almost $150,000.
The latest action also follows court-imposed penalties of $65,438 against the former franchisee of two Subway outlets in Sydney, unveiled in March this year.
In that instance, the company and its directors were found to have underpaid a female employee by more than $16,000 after paying her flat rates of between $14 and $14.50 per hour.
FWO expresses concern over poor compliance
Ombudsman Sandra Parker said her office is “very concerned” by the levels of compliance it had seen across Subway’s franchise network.
She added that the FWO currently has “a number of ongoing lines of enquiry” into Subway’s operations and network.
“Half of the underpaid Subway employees were young workers or from a migrant background, which can make them particularly vulnerable to exploitation. For many of these workers, it might be their first job and they could be unaware of their workplace rights or scared to raise issues with their boss,” Ms Parker said.
“Franchisors, especially in the fast food sector, are a priority for the Fair Work Ombudsman. Franchisors can be held legally responsible if their franchisee stores don’t follow workplace laws.
“They must take reasonable steps to prevent this occurring. The community expects head companies to assure themselves that all the stores in their franchise network are paying workers their correct wages and entitlements.”
The ombudsman added: “We encourage any Subway workers with concerns about their pay to contact us.”
Franchisees risk potential tearing up of franchise agreeement: Subway
“Like the Fair Work Ombudsman, Subway is extremely concerned with wage underpayment and does not tolerate deliberate wage theft. Subway operates a supportive franchise system with comprehensive information and guidance for its franchisees who operate 1,350 restaurants across Australia,” the company said via a spokesperson when approached for comment.
“All franchisees are not only required to comply with Australian workplace laws, but are also required to meet Subway’s own high standards of operation. Failure to do so results in enforcement action by Subway including possible termination of a franchise agreement.
“Since 2017, Subway has strengthened its employment education program for franchisees and restaurant workers with additional broad-ranging measures, including a dedicated employment hotline for employees and expert employment support services for franchisees.”
The retailer concluded: “Subway has commenced a rolling proactive audit of franchisee employment records and has introduced stringent regular internal workplace review requirements for franchisees. Subway will continue to work closely with the Fair Work Ombudsman on any concerns raised by restaurant workers about wage and employment conditions.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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