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The compliance partnerships

In February 2011, following requests for assistance it received from delivery driver employees engaged within the Domino’s network, the FWO entered into its first compliance partnership [partnership] with Domino’s. This partnership operated until the end of 2013 and was underpinned by a proactive compliance deed [PCD]. Under the partnership, Domino’s and its franchisees committed to self-audit the pay packets of more than 22,000 adult delivery drivers at all Domino’s stores for the previous two years1. This auditing process recouped $588,160 in underpaid wages for Domino’s workers2.

In light of the outcomes of the auditing process under the first partnership, Domino’s acknowledged additional investment in network-wide compliance was required, and voluntarily entered into a second partnership with the FWO on 4 September 2014 for a period of two years3.

While the first PCD addressed specific concerns and provided a framework for self-auditing, the second PCD focused on improving franchisee awareness of their workplace obligations and establishing processes for resolving requests for assistance4.

The key milestones of the second partnership are outlined below.

Communication with franchisees 

Domino’s alerted all franchisees and employees to the existence of the second PCD via individual letters, in-store notices, and through its payroll system.

A copy of the PCD was made available to all Domino’s employees on an ongoing basis on their online training system ‘DOTTI’.

Systems and processes to promote compliance

Under the PCD, Domino’s initiated a range of self-monitoring measures including:

  • undertaking individual investigations, store audits, compliance reviews and workplace relations training
  • looking to establish a new Availability, Time and Attendance, Reporting and Payroll System (TANDA) to help comply with workplace laws.

Self-resolution of workplace disputes

Both the first and second PCDs had arrangements whereby the FWO referred requests for assistance it received from workers alleging underpayments of a ‘routine-low’ nature to Domino’s for assessment, rectification and report back within prescribed timeframes. The FWO reserved its right to investigate any matter that was in the public interest, particularly those that contained allegations or appeared to present elements of serious non-compliance.

During the term of the second PCD, the FWO received 20 requests for assistance from employees within the Domino’s service network.

Of these, 10 were referred for assessment, rectification and reporting by Domino’s. The issues raised in these requests for assistance included: underpayment or non-payment of wages or allowances, non-payment of entitlements on termination of employment and non-payment of superannuation.

Domino’s did not directly resolve one referral that related to a franchisee, as the franchisee directly engaged a legal representative to resolve the matter. The matter concerned a dispute over non-payment of notice pay and annual leave on termination. The matter was voluntarily resolved with the payment of $1500 gross to the employee.

Of the remaining nine referrals:

  • six (6) matters were voluntarily resolved with $30 769.26 gross in wages and leave entitlements paid to employees.A further $4381.24 was paid into the employees’ superannuation funds
  • two (2) matters were not sustained
  • one (1) matter was unable to be resolved as the franchisee was no longer in the Domino’s network and was unable to be contacted.

The average time for resolution of the finalised requests for assistance was 34 days.

The FWO decided against referring 10 other requests for assistance from Domino’s workers. The main reasons for this were:

  • under the FWO’s assessment, there was no further action required from Domino’s
  • one matter was resolved by FWO mediation
  • three employees subsequently decided to withdraw their request for assistance.

While the FWO did not receive any requests for assistance during the term of the second partnership that were considered to be of a serious nature, the FWO did take particular interest in one matter where a worker alleged underpayment while working at a Domino’s store in Adelaide.  The FWO referred the matter to Domino’s.  In response, Domino’s reported that the worker who had lodged the request had been underpaid and had since endeavoured to obtain a Domino’s franchise of his own in Adelaide.  When this same worker operated his own store, he also failed to pay his workers their full entitlements and Domino’s took action to remove him from its network.  The owner of the store where he initially worked also left the Domino’s network and Domino’s used the proceeds from the sale of his franchise to back pay all affected employees.

Self-Audits

Given the extensive nature of the self-audit activities undertaken by Domino’s during the first PCD5, there was no specific obligation under the second PCD to undertake self-audits to be certified by an agreed third party.

Nonetheless, in October 2016, Domino’s reported that it had implemented store audits and compliance reviews across its network over the prior two years as part of its systems and process improvements.  Domino’s advised that its compliance reviews consisted of conducting random two-week reviews of stores to monitor and ensure compliance with Commonwealth workplace laws.  If the review found any evidence of non-compliance, the store may have been required to undergo a store audit.  In addition, Domino’s could undertake store audits due to non-compliance found in a compliance review or via an employee complaint.  The process during a store audit involved a review of the store’s time and wages records by an independent external auditor over a 12-month period.

During the compliance partnership, Domino’s disclosed to the FWO the problem areas identified in its store audits and the work it was doing to ensure compliance.  No formal reports on these store audits were required under the second PCD and none were provided, however the FWO was informed by Domino’s that the audits were being conducted by independent external audit specialists. On 14 February 2017, five months after the conclusion of the second PCD, Domino’s reported the findings of its self-audit program to the ASX, disclosing that over the past three years it had completed 102 store audits conducted by a third party, recovering $4.2 million in underpaid wages and superannuation from franchisees.

Intelligence

In September 2016, towards the end of the second compliance partnership, the FWO began receiving information from a variety of sources (industry, ex-franchisees, ex-employees, who wished to remain confidential, and the media) indicating underpayment of employees was common throughout the Domino’s network.

In response to queries from the FWO, Domino’s advised it was aware of concerns and had begun addressing them, including giving assurances that it had exited at least two problem franchisees in 2016.

However, given the serious nature of the allegations, the FWO decided to conduct its own independent compliance activity in order to determine the compliance levels across the Domino’s network.


 
  1. see Domino's to audit employee pay packets media release
  2. see Domino's Pro-active Compliance Deed Report
  3. see Domino's renews partnership with FWO media release
  4. Given the extensive nature of the auditing completed under the first PCD, in which the pay of more than 22,000 Domino’s employees were audited (see: Workplace practices at Domino's improved through Proactive Compliance Deed media release), the second PCD did not prescribe ongoing audit requirements. However, please note that self-audits have since evolved into a fundamental requirement of all of FWO’s compliance partnerships.
  5. Under the first deed, the pay of more than 22,000 Domino’s employees was audited (see: Workplace practices at Domino's improved through Proactive Compliance Deed media release)