Underpayment is rife across the Retail Food Group network of franchised brands according to the latest report from Fairfax Media, allegations the franchisor denies.
One former Michel’s Patisserie franchisee told Fairfax the cases of underpayment at RFG are widespread. Vicky Chen said “Franchisees can’t afford to pay the right wages. It’s just not possible to pay the correct wages with all the costs RFG insists we pay.”
Some RFG workers report franchisees are not paying penalty rates or superannuation, are not providing payslips and are paying staff below-award rates which for fast food is $20.08 an hour.
Instead the employees are receiving an hourly rate of between $10 and $15 an hour, Fairfax reports.
It claims instances of sham sub-contracting, misclassifying employees’ roles to minimise costs, and the reliance on family and friends to work for less than the minimum wage to keep some businesses trading.
These wage fraud allegations follow the suggestion the franchisor’s system is too focused on shareholder return rather than franchisee profitability. Costs are squeezing the franchisees’ business and franchisees are then unable to sell their loss-making outlets, suggests Fairfax.
RFG maintains its position that this coverage “does not accurately reflect its current business, its proactive efforts to better assure employee entitlement compliance and the levels of support it provides to franchisees.”
RFG has no evidence of any widespread franchisee non-compliance with employee entitlement payments, it said in a statement released today.
The franchisor said it has received only one support hotline enquiry from a franchisee since the initial Fairfax Media article on 9 December 2017, and it is investigating the issue.
“RFG accepts isolated incidents, whether intentional or through payroll error, do occur. It goes without saying that RFG takes any allegation or complaint of employee underpayment extremely seriously and diligently investigates with a view to remediating any genuine entitlement underpayment,” the statement reads.
The food franchisor pointed out there are more than 10,000 employees across the network.
RFG reiterated the media reports conflict with facts regarding RFG’s Employee Entitlement Compliance and Monitoring measures.
One initiative includes the RFG Foundations program, which has been developed in collaboration with the National Retail Association, and is designed to help franchisees access employment tools, workplace relations and legal advice. It includes a national toll free workplace advice line and online resource portal.
“These activities are complemented by a structured audit regime focused on identifying and remediating noncompliance,” RFG said.
The franchise group includes brands such as Brumby’s, Crust Pizza, Donut King, Gloria Jean’s Coffees and Michel’s Patisserie.