Subway probed after audit finds franchisees stole $81,000 in wages

The Fair Work Ombudsman (FWO) is undertaking further inquiry with the Australian arm sandwich chain Subway after recovering more than $81,000 in stolen wages from 22 of its franchisees.

In what is just the latest wage theft scandal to rock Subway Australia, the FWO on Tuesday said a total of 167 employees were underpaid by the chain’s franchisees, with 18 of the 22 businesses investigated found to be non-compliant with workplace laws.

The franchisor itself now faces the possibility of legal action if fair Work inspectors determine the company could have reasonably been expected to know the wage theft would occur and failed to take action. 

Subway franchisees failed to correctly pay the minimum wage, casual loadings, public holiday rates and overtime, the FWO said.

Nearly half (45%) of the affected workers were considered vulnerable, either because they were young or from culturally and linguistically diverse backgrounds. 

Fair work ombudsman Sandra Parker said her office is looking into Subway’s operations in Australia, although a spokesperson was unable to confirm whether the franchisor will be pursued on Tuesday afternoon.

Back in March, the Federal Court handed down a $65,000 fine to a former Subway franchisee which paid flat rates as low as $14 an hour, stealing over $16,000 from one Chinese worker.

“Franchisors can be held legally responsible if their franchisee stores don’t follow workplace laws,” Parker said in a statement circulated Tuesday. 

“They must take reasonable steps to prevent this occurring. The community expects head companies to assure themselves that all the stores in their franchise network are paying workers their correct wages and entitlements.”

Franchised companies have been identified as high risk for non-compliance with Australia’s workplace laws. Other large networks including 7-Eleven, Caltex and Domino’s have faced allegations of wage theft in recent years. 

Nine formal cautions and seven compliance notices have been issued to Subway franchisees, while a further nine infringement notices were also served, totalling $5,880 in fines, or 13.8% of the stolen wages recovered.

 In a statement circulated on Tuesday afternoon, Subway’s Australian spokesperson said it is “extremely concerned” by the wage theft in its network.

“Subway has commenced a rolling proactive audit of franchisee employment records and has introduced stringent regular internal workplace review requirements for franchisees,” the spokesperson said.

“Subway will continue to work closely with the Fair Work Ombudsman on any concerns raised by restaurant workers about wage and employment conditions.”

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