Subway franchisee faces Court over alleged wage rort

By Sarah Stowe | 07 Jul 2017 View comments

The franchisee of two Subway outlets in Sydney is facing Court for allegedly short-changing a Chinese worker more than $16,000.

The Fair Work Ombudsman (FWO) has commenced legal action in the Federal Circuit Court against Danmin “Irene” Zhang, who, with her husband, owns Subway franchise outlets at Artarmon and Stanmore.

Also facing Court is the company Zhang and her husband operate, G & Z United Pty Ltd.

The FWO alleges a Chinese national was underpaid a total of $16,345 for work performed across the two Subway outlets between October 2014 and April 2016, except for a four-month period where she returned to China.

The worker, a casual food and beverage attendant aged in her late 20s, was in Australia on a Skilled Nominated (subclass 190) visa at the time.

FWO inspectors investigated after she lodged a request for assistance.

It is alleged that Inspectors found she had been paid flat rates of $14 to $14.50 for all hours worked, leading to underpayment of her minimum hourly rates for ordinary hours, casual loadings and penalty rates for evening, weekend and public holiday work.

Under the Fast Food Industry Award 2010, she was entitled to receive minimum rates of more than $18, plus casual loading, for ordinary hours and penalty rates of up to $52.22 on public holidays.

A special clothing allowance was allegedly also underpaid and laws relating to recordkeeping, pay slips and requirements to inform employees about their terms of engagement and classification were allegedly contravened.

The worker was back-paid in full earlier this year.

It is alleged the underpayment of the worker occurred despite Zhang having received summaries of applicable minimum Award wage rates from the Independent Purchasing Company Australasia (IPCA), a company which works closely with the Subway franchisor to help ensure Subway franchisee outlets meet compliance and branding requirements.

It is alleged Zhang and her company deliberately undercut the wage rates by a significant amount despite the summaries provided by Independent Purchasing Company Australasia (IPCA) being displayed on the walls of the Artarmon and Stanmore Subway outlets.

FWO Natalie James said legal action has been commenced because of the alleged blatant exploitation of a vulnerable overseas worker.

G & Z United Pty Ltd faces penalties of up to $54,000 per contravention and Zhang faces penalties of up to $10,800 per contravention.

Subway communications manager Ben Miles said, “We are supportive of FWO actions in this matter.”

“The franchisee is in default of their franchise agreement and an exit plan is in place,” he added.

James says exploitation of workers in franchises continues to be a concern for the FWO and she welcomed the government’s proposed new laws relating to underpayments within franchise networks.

Before you buy a franchise, know your employment law.