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Conclusion

The Activity has uncovered evidence of significant non-compliance with Commonwealth workplace laws throughout the Domino’s stores audited. The findings of the Activity are consistent with some of the concerns raised with the FWO through intelligence sources prior to commencement of the Activity.

While Domino’s took additional steps in accord with the terms of the PCDs during the period of the two compliance partnerships to improve their systems and processes, these improvements were insufficient to address or prevent ongoing non-compliance throughout the Domino’s network.

The results of the FWO’s audit (of a month’s wage payments at each store) strongly suggests broader, ongoing systemic issues within the Domino’s network of stores that are likely to be contributing to promoting or enabling non-compliance throughout the network.

As the time of publication of this Report, Domino’s had announced that a total of $5.75 million had been recovered for workers from its self-audits, covering the underpayment of wages and superannuation.

The FWO has been unable to validate these internal audit findings and has raised concerns with Domino’s that its audit processes may have relied upon franchisee records without employee corroboration.

The FWO recommends that Domino’s review compliance with workplace obligations in relation to all employees across its network, including at both franchisor and franchisee owned stores, to ensure the network is compliant with its obligations.

The FWO also puts Domino’s on notice that recent law changes mean franchisors can now be held liable for workplace breaches by businesses in their networks.

On 15 September 2017 the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (PVW provisions) took effect. It changed the FW Act to:

  • increase penalties for 'serious contraventions' of workplace laws
  • make it clear that employers can't ask for 'cashback' from employees or prospective employees
  • increase penalties for breaches of record-keeping and pay slip obligations
  • provide that employers who don't meet record-keeping or pay slip obligations and can’t give a reasonable excuse will need to disprove wage claims made in a court (this is also referred to as a 'reverse onus of proof')
  • strengthen our powers to collect evidence in investigations
  • introduce new penalties for giving us false or misleading information, or hindering or obstructing our investigations.

The Commonwealth Parliament also changed laws relating to certain franchisors and holding companies, which can now be held responsible if their franchisees or subsidiaries do not follow workplace laws (if they knew or should have known and could have prevented it). These changes took effect from 27 October 2017. These changes are particularly relevant to Domino’s and its franchise network given the high level of non-compliance identified during the Activity.

The FWO will continue to closely monitor Domino’s across its service network (comprising both franchisor and franchisee owned stores), including responding to requests for assistance from employees and assessing any intelligence received. In addition, within twelve months of the publication of this report, the FWO will commence a further compliance activity. This activity will involve unannounced site visits to franchisor and franchisee owned stores to determine whether Domino’s has taken reasonable steps to discharge its obligations as required under the PVW provisions in preventing, detecting and addressing non-compliance within its network.

The FWO has a range of powers to assist in making this determination including collecting evidence by way of a ‘FWO Notice’ if it is reasonably believed that a person or business has information or documents that will help an investigation and is capable of giving evidence.  The publication of the findings contained in this Report will, if required, assist the FWO secure approval from the Administrative Appeals Tribunal to issue a ‘FWO Notice’.

From 24 January 2018 the Domino’s Enterprise Agreements were terminated by the Fair Work Commission and stores from that date derived employee entitlements from the Fast Food Industry Award 2010 (the Modern Award)1. Given the levels of non-compliance identified in this Activity, the FWO has recommended that Domino’s provide significant training and support to its stores to ensure understanding of the requirements of the Modern Award and compliance with the FW Act.

It is up to Domino’s as a profitable and well-resourced lead firm, and as a ‘responsible franchisor’ for its network’s compliance within the meaning of the new franchisor liability laws, to take reasonable steps to actively monitor its own and its franchisees’ compliance with its workplace obligations in relation to Domino’s Pizza employees. The FWO also calls upon Domino’s to publish the findings of its audit activities so that consumers can be confident Domino’s is complying with the law.


 
  1. Shop Distributive and Allied Employees Association [2017] FWCA 5703 (1 November 2017) external-icon.png