Caltex kicks out 19 franchisees, puts up $20m employee assistance fund

Inside Franchise Business: Caltex puts up $20m employee assistance fundCaltex Australia is setting up a $20 million assistance fund for underpaid franchisee employees and has terminated the agreements of 19 non-compliant franchisees.

The petrol convenience chain’s initiative is about “doing the right thing by franchisee employees” according to a statement released today.

In an ongoing internal audit of 133 franchisees, 54 have so far been audited and 19 franchisees have had their franchise agreements terminated for wage exploitation or other workplace non-compliance.

Caltex said it “deplores this illegal and unfair practice and is committed to stamping it out anywhere in its network”.

The company reports it has reviewed its franchise model and confirmed the model allows franchisees to draw a wage, make a profit, and pay their employees’ lawful entitlements.

The statement reads: “The review of the model and the audits undertaken reveal there is no correlation between site profitability and underpayment of franchisee employees. The responsible franchisees will remain liable for any underpayments to their employees and the Caltex fund will not prejudice the ability of franchisee employees to seek redress from their employers.”

Caltex will seek to recover the costs of its fund from franchisees responsible for underpayment of their employees’ entitlements.

A spokesperson for Caltex indicated there are likely to be further terminations as the audit is completed.

How Caltex is managing the claims

  • The $20 million figure is based on Caltex’s assessment of workplace audit data and evidence to date.
  • The fund will allow franchisee employees to claim underpayments for the period from 2015 to date.
  • When franchisees are exited from the network, employees and former employees of those franchisees will be encouraged to come forward if they believe they may have been underpaid.
  • Since November 2016, an independently-managed, confidential hotline has been in place for franchisee employees to report underpayment issues.
  • Franchisee employees will be able to make claims within three months of a franchisee exiting the Caltex network or, for franchisees who have already exited, in the three months from 31 May 2017.
  • Claims will need to be substantiated and assessed before payments are confirmed.