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Three-quarters of Pizza Hut outlets found to be non-compliant

Less than a week after one of the Fair Work Commission's (FWC) most senior members issued a scathing letter of resignation, saying the FWC is viewed by the business community as "partisan, dysfunctional and divided", the Fair Work Ombudsman (FWO) has released an Activity Report confirming widespread non-compliance within Pizza Hut outlets. With three quarters of audited outlets failing to comply with workplace laws.

The FWO Activity 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.

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:

  • ● 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 awardor failing to increase rates in line with Fair Work Commission minimum wage decisions.

To date, the FWO is addressing these issues by:

  • ● Issuing three enforceable undertakings to different franchisees (see Enforceable Undertakings resulting from the Fair Work Ombudsman's Activity Report on Pizza Hut outlets);
  • ● Issuing 11 compliance notices to franchisees for underpaying employee;
  • ● 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.

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.

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