76% of audited Caltex franchises found to be underpaying workers
Caltex Australia has been accused of presiding over a "non-compliant and unsustainable operating model", with the Fair Work Ombudsman reporting that more than three-quarters of outlets it inspected were underpaying and exploiting workers.
Only six of 25 retail fuel outlet sites operated by 23 Caltex franchisees in Brisbane, Sydney, Melbourne and Adelaide inspected were found to be complying with workplace laws. This represented a non-compliance rate of 76 per cent.
Only six of 25 retail fuel outlet sites operated by 23 Caltex franchisees in Brisbane, Sydney, Melbourne and Adelaide inspected were found to be complying with workplace laws.
Photo: Sasha Woolley“In light of this alarmingly high level of non-compliance across its retail fuel outlets, I am not surprised by Caltex’s announcement to the ASX last week that it will transition franchise sites to company operations,” Fair Work Ombudsman Natalie James said.
“FWO’s report shows Caltex Australia has been presiding over a non-compliant and unsustainable operating model.”
Caltex last week said it would bring all its petrol stations under company control by 2020 but denied the move was in any way connected to widespread wage fraud in its franchise network unearthed by a Fairfax Media investigation in 2016.
The FWO has been investigating complaints about the non-payment and underpayment of wages, cash payments made "off the books", false records, and threats of termination or visa cancellation for any workers who complained.
Inspectors found evidence of underpayment of wages, non-payment of overtime and penalty rates as well as record keeping and pay slip breaches at most of the sites it visited.
FWO’s report shows Caltex Australia has been presiding over a non-compliant and unsustainable operating model.
Inspectors also reported concerns about the accuracy of the time and wage records provided by non-compliant franchisees.
Legal action is being taken against two franchisees for allegedly providing falsified records.
In both cases, the Fair Work Ombudsman alleges the absence of accurate time and wage records prevented inspectors from completing audits and determining whether employees had received their lawful entitlements.
During the activity, the regulator issued nine infringement notices, 11 compliance notices and 16 formal cautions to non-compliant franchisees.
Inspectors recovered a total of $9329.85 in back pay for 26 workers who were underpaid during a one-month assessment period. But with so many deficiencies in the outlets’ records it was impossible to be sure of the true extent of the wage rip-offs, the ombudsman said.
The investigation found that 17 of the 23 franchise operators were from non-English speaking backgrounds, with minimal knowledge or experience of federal workplace laws. This had made low-skilled employees more vulnerable to exploitation in a competitive market.
“Caltex should have recognised this in its business model by ensuring franchisors properly understood their obligations and conducted monitoring to assure itself that obligations were being met,” Ms James said.
Fair Work Ombudsman Natalie James said it is clear Caltex's checks were inadequate and failed to properly consider the dynamics at play in its business.
Photo: Andrew Meares“While Caltex claims it had a practice of carrying out annual reviews and audit processes to ensure compliance with the law, it is clear these checks were inadequate and failed to properly consider the dynamics at play in its business.”
“There’s no question that if these findings indicate the norm in this network, and if these underpayments are replicated throughout the business month after month, we are quickly looking at millions of dollars of underpayments over the course of a few years,” Ms James said.
“A large number of employees at the audited sites are young and migrant workers, cohorts that we know to be particularly vulnerable to workplace exploitation and reluctant to complain about mistreatment.
“Sixty per cent of the 194 employees the Fair Work Ombudsman obtained records for were visa holders and nearly 26 per cent under the age of 24."
Ms James said the FWO had offered Caltex the opportunity to enter into a compliance partnership but Caltex showed little interest.
Ms James has called on Caltex to engage seriously in the offer of a compliance partnership so that the regulator and the Australian community can be confident Caltex is operating openly and honestly. Caltex has previously announced plans to convert all its franchised service stations to company-operated stores by mid-2020.
“The Australian public expects nothing less from such large and reputable companies, and recent changes to the law mean that in some circumstances franchisors or holding companies can now be held liable for breaches or underpayments by their franchisees,” Ms James said.
Caltex has been approached for comment.
Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.
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