Subway under investigation by Fair Work over staff underpayment
August 12, 2019
Sydney Morning Herald
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.
Former Subway employee Renee McCarthy said she was underpaid by the franchise giant.
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."
Systemic underpayment
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 they could," he said.
Mr Machen said a particular concern was unpaid mandatory training through the "Subway University".
"I have done that three different times," he said. "It was an online module and you could do it in your own time ... all up it took five to six hours. There were quizzes you needed to do to finish the whole thing."
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Mr Machen said staff were told they would be given $50 for doing the training but were never paid.
"At a different store where I got paid cash in hand the guy there made me watch trainee videos for a week after every shift," he said.
Lawyer Felicity Sowerbutts from The Young Workers Centre said Subway employees complained of underpayment, the use of expired "Work Choice era" agreements, lack of penalty rates and physical and verbal bullying.
"These are very young workers in Subway it is often their first job and a young person's first job should be a positive experience," she said. "It is a pretty sad way to start your working life with a culture of bullying and intimidation."
A Subway employee, who wanted to remain anonymous for fear of repercussions, said she has worked at three different Subway stores over a three year period and has been underpaid in each store and not paid overtime in her current role.
"Now we only have one person closing at a time so overtime happens nearly every time a shift," she said. "My overtime would be worth at least $100 a week, it would be a big difference."
Former Subway employee Renee McCarthy worked at the franchise for more than three years and said she was underpaid by $1,300 after being paid through a 'pirate [workplace] agreement' which had expired but was never updated.
Renee McCarthy said she and other Subway staff were bullied when they worked at the franchise.
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