Domino’s Pizza Enterprises Limited [ACN 010 489 326] (Domino’s) is the master franchisor of Domino’s Pizza, Australia’s largest pizza chain.
In February 2011, following a number of requests for assistance that the Fair Work Ombudsman (FWO) received from delivery-driver employees within the Domino’s Pizza franchise network, Domino's voluntarily entered into its first compliance partnership with the FWO.
The key objective of the first compliance partnership was to assist the head franchisor monitor its service network to ensure employees received their entitlements. Under this compliance partnership, Domino’s and its franchisees committed to self-audit the pay of more than 22,000 adult delivery drivers at all Domino’s stores for the previous two years. This auditing process recouped $588,160 in underpaid wages for Domino’s workers.
In September 2014, Domino's voluntarily entered into its second compliance partnership with the FWO. The second compliance partnership was aimed at improving franchisees' awareness of their workplace obligations and establishing centralised processes for resolving requests for assistance from workers.
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 wishing to remain confidential, and the media) indicating underpayment of employees was common throughout the Domino’s network.
To satisfy itself about the compliance levels across the Domino’s network, the FWO commenced a compliance activity (Activity) involving the investigation of a sample of 33 Domino’s stores. Of the sample selected for auditing, some stores were selected across the network due to reported issues (including 10 stores owned by the one franchisor); others were randomly selected to test the overall national level of compliance.
The Activity found significant non-compliance with Commonwealth workplace laws contained in the Fair Work Act 2009 (FW Act) and the applicable Domino’s enterprise agreements (Enterprise Agreements).
Of the 33 Domino’s stores audited, 10 stores operated by a single franchisor remain under investigation. Of the 23 finalised investigations, 19 of those stores were found to have at least one breach of workplace law.
The Activity found breaches covering underpayments of overtime and minimum shift engagements, as well as non-payment for hours worked, delivery allowance, annual leave loading and personal leave entitlements. The Activity also disclosed unauthorised deductions.
In reviewing a month of wage payments from 6 February to 5 March 2017 at each store, the Activity disclosed underpayments for 20 workers totalling $1978.77 (an average of $99 per worker). If the FWO was to extrapolate the results from this sample over a longer period and across the whole of the Domino’s network, it is likely that total underpayments of Domino’s employees are both significant and widespread.
By focusing in-depth on 33 stores (twenty-seven (27) franchise, six (6) corporate (including a joint venture1) (collectively the Stores) the Activity to date has resulted in the following enforcement outcomes for a range of breaches:
- 17 Formal Cautions
- Four (4) Compliance Notices
In addition to disclosing the findings of the Activity, this Report details the outcomes of the second compliance partnership.
While noting the steps taken by Domino’s since late 2016 to address non-compliance in its network by auditing its stores, the FWO remains concerned about the levels of non-compliance as disclosed by its Activity.
The FWO recommends that Domino’s immediately commence a review of compliance with workplace obligations in relation to all employees across its network, including at both franchisor and franchisee owned stores.
Given the levels of non-compliance identified in this Activity, the FWO has also recommended that Domino’s set clear expectations with all its stores and provide them with comprehensive training and support to ensure understanding and compliance with the FW Act and the Modern Award, including of the new Protecting Vulnerable Workers provisions that deal with the following:
- increased penalties for 'serious contraventions' of workplace laws
- making it clear that employers can't ask for 'cashback' from employees or prospective employees
- increased penalties for breaches of record-keeping and pay slip obligations
- new requirements 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')
- strengthened powers of the FWO to collect evidence in investigations
- new penalties for giving the FWO false or misleading information, or hindering or obstructing its investigations.
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, the FWO also calls upon Domino’s to actively monitor its own and its franchisees’ compliance with its workplace obligations. The FWO 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.
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 new Protecting Vulnerable Workers provisions in preventing, detecting and addressing non-compliance within its network.
- ‘Joint venture’ stores are jointly owned as a partnership between corporate and a franchisee. While these are part owned by corporate, they are fully run by the franchisee