The Fair Work Ombudsman has found Pizza Hut underpaying young employees

Pizza Hut has been underpaying its drivers at some restaurants, according to the Fair Work Ombudsman.

A major check of Australia’s Pizza Hut franchise chain by the Fair Work Ombudsman found three-quarters of stores did not to comply with workplace laws.

The ombudsman looked at a 34 stores — little over 12% of the chain’s 270 Australian stores — in November 2015, focusing on delivery drivers, discovering that some are paid as little as $5.70 an hour.

Of 26 completed audits, only two franchisees were found to comply with their legal obligations.

Among the remaining 24 stores that did not, the Ombudsman found that seven had misclassified delivery drivers as independent contractors when they were employees. Workers were owed more than $12,000, mainly because of underpayment on minimum hourly rates or allowances such as laundry.

The Ombudsman said some underpayments were a consequence of the franchisee applying the wrong award or failing to increase rates in line with Fair Work Commission minimum wage decisions.

It issued 11 notices to franchisees for underpaying employees, recovering $12,086 in wages.

A further 11 infringement notices for record keeping problems, resulting in $6,300 in fines.

The Ombudsman is looking at legal action against one franchisee and issued letters of caution to a further 17 outlets.

Australian private equity business Allegro took control of the Australian licence for Pizza Hut from US-based Yum! Brands last September, then subsequently acquired 50 stores from the failed Eagle Boys group. The company is currently converting them into Pizza Hut stores create 320 stores in the chain.

Pizza Hut Australia CEO Lisa Ransom says the company has been working proactively with all franchisees and the Fair Work Ombudsman.

“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,” she says.

“We have also worked diligently to reinforce to franchisees their obligations as employers, ensure all the appropriate tools are in place for them to calculate rates of pay, and facilitate access to the Fair Work Ombudsman online training tools.”

Fair Work Ombudsman Natalie James says the extent of non-compliance involving delivery drivers had led to preliminary discussions with the new owners about starting a compliance partnership similar to the one invoked when underpayments were discovered at 711 stores

James says 32% per cent of the 170 workers they dealt with were under the age of 24.

“We know that younger people, who have less experience in the workplace are more likely to be unaware of their rights,” she says.

“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.”

She said the ombudsman will continue to monitor Pizza Hut outlets.

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