A Pizza Hut franchisee on the Gold Coast has been penalised a total of $216,700 after being found to have exploited an Indian delivery driver under a 'sham' contract and using false records to try to cover it up.
The Indian national, aged in his 20s, worked as a pizza delivery driver for Gold Coast man Dong Zhao, who owns and operates the Pizza Hut franchise outlet at Upper Coomera, between November 2015 and May 2016.
Mr Zhao and his company Skyter Trade Pty Ltd engaged the Indian national in a bogus contract, the Fair Work Ombudsman found.
Zhao, instead of employing him, asked the delivery driver to provide an Australian Business Number (ABN) and then treated him as an independent contractor, paying him a flat rate of no more than $16 an hour.
However, as an employee rather than an independent contractor, the worker was entitled to receive at least $20.36 for ordinary hours and up to $40.72 for overtime and public holiday work under the Pizza Hut enterprise agreement that applied to the business.
The driver, who used his own car for delivery, was also underpaid a per-delivery entitlement, superannuation and a uniform allowance.
The driver has been back-paid in full and Zhao has been penalised $36,700 and his company Skyter Trade Pty Ltd has been penalised an additional $180,000.
Source: AAP
The penalties, imposed in the Federal Circuit Court, were a result of legal action taken by the Fair Work Ombudsman who conducted audits of more than 30 Pizza Hut outlets in 2016 and found widespread non-compliance in the franchise network.
Judge Michael Jarrett imposed the penalties after finding the sham contracting contravention was “serious” and “deliberate” conduct that occurred despite Zhao having received clear advice from the franchisor not to engage in such arrangements.
'Depressed and humiliated' after having to borrow over $20,000 from family
Judge Jarrett said the underpayment amounts were significant to the driver.
“According to the evidence, he was the sole breadwinner for he and his wife and was responsible for their daily living expenses, rent, groceries and his wife’s tuition fees,” Judge Jarrett said.
“Partly as a result of being underpaid, he needed to borrow about $1,500 from his cousin in Melbourne and about $20,000 from his father in India, which he says was culturally shameful and embarrassing.
“(The driver’s) evidence was that he was constantly anxious and stressed about their low bank balance and at times felt depressed and humiliated.
“The evidence is that (the driver) was responsible for paying all the running costs for his car that he used for all deliveries he performed for the respondents, as well as paying for replacement tyres, registration and insurance.”
Source: Pixabay
Employer 'actively sought to mislead' Fairwork Ombudsman
Judge Jarrett found that Zhao had 'actively sought to mislead' the Fair Work Ombudsman.
“The failure to keep proper records and to provide pay slips to employees is an insidious practice that is only aggravated by the creation and provision of false documents designed to conceal the employer’s wrongdoing,” Judge Jarrett said.
“Employers and those that control them ought to be under no misapprehension that the creation and provision of false records is a serious matter and will be treated seriously by the Court.”
Fair Work Ombudsman Natalie James says the case sends a message that sham contracting is serious conduct and significant consequences apply.
“We treat sham contracting particularly seriously because it can result in employees being deprived of basic minimum wages and protections,” Ms James said.
Ms James said it was important to note that under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017, which came into effect in September 2017, franchisors can now be held responsible for contraventions by a franchisee.
How to contact Fair Work Ombudsman
Employers and employees seeking assistance can visit www.fairwork.gov.au, where information is available in 40 languages, or call the Fair Work Infoline on 13 13 94.
Small business callers can opt to receive priority service via the Small Business Helpline and an interpreter service is available on 13 14 50.
The Fair Work Ombudsman’s popular Anonymous Report function, available in 16 languages other than English, allows visa-holders to report workplace concerns anonymously to the agency in their own language.
