Pizza Hut under fire for sham contracts
Australia's second-biggest pizza chain, Pizza Hut, is under fire as evidence emerges that its franchisees are using "sham" contracts to pay delivery drivers as little as $12 an hour without super or WorkCover.
It comes as the franchise giant is fighting its franchisees in the Federal Court after they launched a class action against head office alleging unconscionable conduct under the franchising code.
Pizza Hut has been locked in a deep discounting battle with rival chain Domino's.
Evidence shows Pizza Hut's franchisees are paying delivery drivers as little as $12 an hour without super or WorkCover.
Over the past five years, Pizza Hut has faced fierce competition from rival chains, particularly from the fast-growing Domino's chain and premium pizza chains. The increased competition has led to Pizza Hut closing some of its restaurant stores to focus on home delivery and introducing steep discounts to win customers.
An estimated 90 per cent of franchisees claim losses and business collapses as a direct consequence of orders that they slash the cost of pizzas up to 50 per cent to take market share from rivals.
A contract obtained by Fairfax Media shows a driver can earn $6 a delivery, with no more than two deliveries per round trip. Under the terms of the contract drivers provide the car, pay for fuel, vehicle maintenance and insurance.
Maurice Blackburn principal Josh Bornstein, who reviewed a copy of the contract said, in his view, the contract was a "sham".
A delivery driver, who asked to remain anonymous for fear of losing his job, said the franchisee had offered him an $8 an hour arrangement plus $4 per delivery as a compromise to the $6 per delivery contract, which includes the logo of Pizza Hut on the corner.
"That's the best pay methods we can do so far. The business need to make some money to keep running. Please understand," emails show.
Maurice Blackburn principal Josh Bornstein, who reviewed a copy of the contract for Fairfax Media, said in his view the contract was a "sham".
"Is this driver an independent business person in the business of delivering pizzas? In my view, absolutely not," Mr Bornstein said.
"He is employed to deliver the company's product as and when directed. He is not genuinely running a pizza delivery business. In other words, in my view, the contract is a sham."
Other Pizza Hut franchisees are also believed to be using similar contracts.
Driver sources suggested the model means drivers can only earn as little as $12 per hour.
The revelation comes after a joint investigation by Four Corners and Fairfax Media revealed systemic worker exploitation at 7-Eleven. Workers at a range of fast food chains, nail salons, restaurants and retail stores have also been caught out underpaying and mistreating workers, many of whom are international students.
One worker in a northern suburb of Melbourne said the franchisee was paying cash. "There is no paperwork and neither there is proof. But the biggest proof is employees, who are working there, who are exploited and have no other option apart from working and supporting them selves."
Another said one franchisee was paying $10 an hour plus $1 or $2 for each delivery.
A spokeswoman for Pizza Hut said the company was not aware of the specific contract and said it was out of step with the chain's practices.
"This contract, if authentic, is inconsistent with Pizza Hut's enterprise agreement which is in place for Pizza Hut franchisees," the spokeswoman said.
"Pizza Hut with its franchisees have negotiated a national enterprise agreement with the Shop, Distributive and Allied Employees Association (SDA) under which includes rates of pay for drivers and team members."
It is understood Pizza Hut has in the past pushed to have delivery drivers put on contracts.
SDA national secretary Gerard Dwyer said he was outraged to hear Pizza Hut franchisees were using independent contracts to pay delivery drivers as little as $6 per delivery.
"These are not legal rates. They've [drivers] have got to be paid the award rate," Mr Dwyer said.
"We have an agreement in place that does not allow for contractors. We're in the midst of negotiating a new agreement with Pizza Hut where we are looking for an increase in rates."
Mr Dwyer said under the current EBA delivery drivers at Pizza Hut are to be paid $20.35 per hour if employed as a full-time worker or $25.44 per hour if employed as a casual worker. Drivers also receive $2.13 per delivery on top of the hourly rate to cover vehicle costs.
Source: SMH 23/11/2015
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