Gold Coast Pizza Hut franchisee faces Court

15 June 2017

A Pizza Hut franchisee on the Gold Coast is facing Court for alleged sham contracting activity and underpaying a delivery driver more than $6000.

The Fair Work Ombudsman has commenced legal action in the Federal Circuit Court against Gold Coast man Dong Zhao, who owns and operates the Pizza Hut franchise outlet at Upper Coomera.

Also facing Court is Mr Zhao's company Skyter Trade Pty Ltd.

Fair Work Ombudsman inspectors investigated Mr Zhao's Pizza Hut outlet as part of an activity that involved audits of more than 30 Pizza Hut outlets and identified widespread non-compliance in the franchise network.

It is alleged inspectors found that Mr Zhao had asked a delivery driver he engaged at his Pizza Hut outlet to provide an Australian Business Number (ABN) and then treated him as an independent contractor between November 2015 and May 2016. The Fair Work Ombudsman alleges the driver ought to have been engaged as an employee and the arrangements amount to 'sham contracting'.

The driver, an Indian national aged in his 20s, was in Australia as a dependent on his wife's international student visa at the time.

It is alleged that in an interview with a Fair Work inspector, Mr Zhao admitted that he paid the employee a flat rate of pay of no more than $16 per hour.

However, as an employee rather than an independent contractor, the worker was entitled to receive at least $20.36 for ordinary hours and up to $40.72 for overtime and public holiday work under the Pizza Hut enterprise agreement that applied to the business.

He was allegedly also underpaid a per-delivery entitlement, superannuation and a uniform allowance. The driver has now been back-paid in full.

It is also alleged that Mr Zhao and his company failed to comply with a Notice to Produce employment records and contravened pay slip and record-keeping laws, including by providing false records to the Fair Work Ombudsman during its investigation.

The Fair Work Ombudsman says legal action has been commenced because sham contracting is serious conduct that deprives employees of basic minimum wages and protections.

Skyter Trade Pty Ltd faces penalties of up to $54,000 per contravention and Mr Zhao faces penalties of up to $10,800 per contravention.

The Fair Work Ombudsman is also seeking orders that Mr Zhao's company commission retrospective and future audits of pay practices at his Pizza Hut outlet and rectify any underpayments discovered, and to display a workplace notice containing information about minimum lawful pay rates and Fair Work Ombudsman contact details.

The matter is listed for a directions hearing in the Federal Circuit Court in Brisbane on August 7.