Muffin Break and Jamaica Blue franchisor FoodCo has back paid 166 of its workers more than $26,000 after a Fair Work Ombudsman (FWO) audit discovered workers had been ripped off by the company.
FoodCo entered into a two-year compliance agreement with the FWO in 2017 after one of its franchisees was caught paying two workers as little as $11 an hour, totalling $46,000 in stolen wages.
The partnership, which included third-party audits of the broader Muffin Break and Jamaica Blue networks, uncovered further non-compliance with workplace laws across the company.
Foodco investigated just over $22,000 in underpayment for 14 workers itself, while a third-party audit identified that a further 152 employees were underpaid about $4,200.
The case is just the latest wage theft scandal to rock the franchising sector in recent years, with workers in other large networks such as Domino’s, 7-Eleven and Caltex also allegedly underpaid.
Fair work ombudsman Sandra Parker said last week an increasing number of large employers are self-reporting underpayments to her office, with some asking for a light-touch enforcement approach.
Parker has said employers who confess to wage theft will be required, at a minimum, to enter into enforceable undertakings with the FWO. This, Parker said, will also include contrition payments.
“Franchisors are a priority sector for the Fair Work Ombudsman and we urge all head offices to prioritise compliance with workplace laws or they risk damage to their brand and employees,” Parker said in a statement circulated Tuesday.
“Under the Protecting Vulnerable Workers amendments to the Fair Work Act in 2017, franchisors are responsible for ensuring compliance throughout their service network,” Parker said.
The Jamaica Blue and Muffin Break networks maintain 338 stores across Australia, most of which are operated by franchisees.
Under Foodco’s agreement with the FWO, the company has also undertaken workplace law training sessions for franchisees and staff, launched a whistleblower hotline and improved access to information about worker rights and entitlements.
The FWO said it is open to entering into a second compliance partnership with the company, encouraging it to “continue to invest in enhancing compliance practices”, although no specifics about whether workplace law compliance issues remain within FoodCo were detailed on Tuesday.
Foodco paid a third-party, Employment Innovations, to audit compliance with workplace laws in its network in 2016.
While just 10% (38) stores were audited, it was found only two were fully compliant with workplace laws, identifying 57 breaches of the Fair Work Act.
A Foodco spokesperson said the company is committed to ensuring its franchisees comply with correct employment practices.
“Foodco Group is committed to a zero-tolerance of wage theft and is proud to be one of the first FCA members to enter into a voluntary Proactive Compliance Deed with Fair Work Ombudsman,” it said.