Fine places former Pizza Hut franchisee in liquidation

By Nick Hall | 23 Sep 2019 View comments

A former Pizza Hut franchisee who exploited a delivery driver has been forced into liquidation, unable to pay a $216,000 penalty.

Back in June, 2017, the Fair Work Ombudsman (FWO) commenced legal action against Dong Zhao and his company Skyter Trader Pty Ltd, which operated the Upper Coomera store on the Gold Coast.

The action followed the ombudsman’s audit of over 30 Pizza Hut outlets, discovering non-compliance at a number of stores.

Inspectors found that the former Pizza Hut franchisee had treated a delivery driver as an independent contractor instead of an employee, resulting in systematic underpayment that the FWO referred to as ‘sham contracting’.

Under the Pizza Hut enterprise agreement, the driver was entitled to receive at least $20.36 for ordinary hours and up to $40.72 for overtime and public holiday work. Instead, he received a flat rate of just $16 per hour.

Former Pizza Hut franchisee fine

Penalties were handed down in accordance, with Zhao copping a $36,700 fine and Skyter Trade Pty Ltd receiving $180,000 in penalties, however Judge Michael Jarrett also found that Zhao had sought to mislead the court.

“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 wrong doing,” Judge Jarrett said at the time.

“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.”

In the 15 months since the judgement was handed down, the former Pizza Hut franchisee has been unable to repay the fine, prompting further action.

In July, the FWO filed application to have the company wound up in insolvency and on Friday, Registrar Katie Lynch agreed.

Registrar Lynch ordered the company not only be wound up in insolvency, but that Ian Currie of BRI Ferrier be appointed as liquidator.

According to reports, an investigation into the former Pizza Hut franchisee and his company’s operation is ongoing.