Auckland Domino’s franchise owners fined

Domino’s Pizza has once again felt the sting of poor franchise management, with two former franchise owners being handed stiff penalties following a Labour Inspector investigation.

The two Auckland-based companies, which operate as Domino’s pizza franchises were ordered to pay $16,200 by the Employment Relations Authority (ERA) for failing to comply with the minimum standard employment obligations.

E Ming Limited and E Lynn Limited, both directed by Mr Xi Chen operated franchises in Henderson and Te Atatu respectively, between 2011 and February 2017.

The report, handed down by the Labour Inspector found that both franchises were in serious breach of employment law by failing to keep accurate wage and leave records, affecting some 112 staff across both.

Specifically, E Ming and E Lynn failed to;

  • Keep wage and time records that were compliant with s 130 of the Act
  • Keep holiday and leave records that complied with s 81 of the Holidays Act
  • Provide employees with individual agreements that complied with s 65 of the Employment Relations Act 2000 and s 52 of the Holidays Act 2003

The investigation deemed that as a result of the lack of records, E Ming had underpaid its employees a total of $23,878.89, and E Lynn had underpaid its employees a total of $30,746.61.

In addition to penalties, Mr Chen also paid his staff more than $54,000 in arrears, as calculated by Domino’s Pizza Enterprises.

Loua Ward, Labour Inspectorate Retail Lead said there was no excuse for the franchises’ disorganised practices in regards to staff employment operations.

“It’s disappointing to see companies operating under established and international brands, failing to provide employees with their minimum rights,” Ward said.

“These businesses have highly systematic approaches to the production of their product. It’s quite unacceptable that they do not have a similarly systematic approach throughout their operations, to ensure compliance with minimum employment rights, for what can be very vulnerable workers.

“It’s simply not acceptable for businesses to ‘fix things up’ after the event. Businesses and their brands must have mechanisms in place to monitor and prevent employment standards breaches. It’s the ‘getting it right’ that counts.”

Speaking with Inside Franchise Business, Domino’s also denounced the actions of the franchisees and said the company was committed to ensuring all franchisees comply with the national regulatory standards.

“Domino’s conducted a thorough wage audit after a staff complaint in relation to the particular store and team member wages. This included working closely with the Ministry of Business, Innovation and Employment. As a result, the franchisee was removed from the business and any underpayments of team members found were immediately rectified.”

“Domino’s expects all of its franchisees to comply with their New Zealand employment law obligations. As mentioned above, this behaviour is not tolerated and the franchisee no longer works with Domino’s. Any complaint/s received by Domino’s are immediately investigated and as seen in this example, action immediately taken.”

“First and foremost, our concern is with ensuring our team members are treated as they should be, including being paid correctly at all times.”

The fines cap off a forgettable week for Domino’s with Inside Franchise Business reporting on Friday, the company’s shares had plunged to its lowest level in more than a month as investors dumped stock amid analysts’ downgrades.