A Fair Work Ombudsman report says it has found widespread non-compliance within franchised Australian Pizza Hut with three-quarters of audited outlets failing to comply with workplace laws.

The audit, which began in November 2015, focused around the use of delivery drivers. Out of the 26 audited franchises, only two met all of their legal obligations.

Out of the 24 non-compliant franchises, seven had misclassified delivery drivers as independent contractors instead of employees and a total of AUD $12, 056 in underpayments were owed.

FWO says it is now uncovering the missing wages and issuing fines. It said given the extent of the non-compliance, it has also had discussions regarding a possible compliance partnership with the owners of Pizza Hut Australia’s franchise, private equity firm Allegro, which operate the business under the name, Pizza Pan Group.

Allegro acquired the master franchise agreement from Yum! Brands in September 2016.

FWO says youth at risk of workplace exploitation

Fair Work Ombudsman, Natalie James, said those employed as delivery drivers are often very young, making them more vulnerable to exploitation.

“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.

She said that younger people who have less workplace experience 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 AUD $5.70 per delivery while also being made to cover fuel and vehicle operating costs,” she said.

The Fair Work Ombudsman said it will continue to monitor Pizza Hut and will follow up with those identified through the reporting process to make sure areas of non-compliance are being addressed.

Pizza Hut Australia’s response  

Chief Executive Officer of Pizza Hut Australia, Lisa Ransom, said the Pizza Pan Group takes its responsibilities as the new franchisor and employer very seriously.

“Since acquiring the business we have worked directly and proactively with all franchisees and the Fair Work Ombudsman and engaged the services of experts in the area of industrial awards,” she said.

“We have engaged a third party payroll provider which our company-owned restaurants all utilise and have offered this opportunity to our franchisees to assist them in meeting employer obligations.”

Pizza Hut Australia also said one of the non-compliant franchises, Romaro Holdings, is no longer a franchisee and the store is now managed by Pizza Hut Australia.

“Pizza Hut does not tolerate non-compliance and is committed to ensuring all franchisees meet their legal obligations.” Ransom said.

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