AUSTRALIA: Subway has said it could terminate franchisees that do not pay staff properly after it emerged the US sandwich giant is under investigation by the Fair Work Ombudsman over underpayment of local employees.
The troubled franchise is under pressure after an investigation by The Age and Sydney Morning Herald revealed it is closing stores, suffering from falling revenue and facing a backlash from some franchisees forced to pay the price of costly renovations. The Sydney Morning Herald and The Age has confirmed Subway is now the subject of an inquiry by the ombudsman following claims by employees of underpayment across the franchise network.
“The Fair Work Ombudsman’s investigation in relation to the Subway chain is ongoing, and it is therefore not appropriate to provide further comment at this time,” a FWO spokesperson said. A spokesperson for Subway responded to questions by saying franchisees were the “face of Subway” and were required to meet regulatory, financial reporting, workplace and employment requirements.
“Failing in their commitment to uphold these will result in enforcement action and continued non-compliance may lead to termination,” the spokesperson said.
The spokesperson said franchisees are required to conduct quarterly audits of their employment records and Subway conducts both proactive and responsive reviews of employment and financial records.
“All Subway restaurant employees are entitled to payment for hours worked, including for training,” the spokesperson said. “Any employee who believes they have been paid incorrectly by a franchise owner is encouraged to report this to Subway for investigation, through a dedicated employee hotline.”
The $170-billion franchising industry has been exposed as a hotbed of wage underpayment in a series of media investigations. Current and former Subway employees provided by The Young Workers Centre in Melbourne, The Young Workers Centre, a union affiliated group in Melbourne that has received over two dozen complaints about Subway over the last 12 months.
The employees dispute the company’s claim that it is “proactive” and that employment records are audited regularly.
We don’t think it is good enough to wash their hands of responsibility.
Former Subway employee Oscar Machen said he has worked at various Subway outlets from the age of 18 and was paid under the award rate at “pretty much” every store.
“They were all in the game of keeping those wages as low as possible however th