Subway wages in FWO spotlight

By Sarah Stowe | 12 Aug 2019 View comments

Will sandwich chain Subway be the latest fast food chain to have franchisees fall foul of the Fair Work Ombudsman?

A report in Fairfax Media indicates the FWO is pursuing underpayment concerns at the food retailer.

The FWO confirmed the investigation. A spokesperson told Inside Franchise Business “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.”

According to Sydney Morning Herald and The Age reports Subway could take disciplinary action and terminate franchisee agreements if franchisees are found to have failed their workplace responsibilities.

A spokesperson from the sandwich chain told Fairfax: “Failing in their commitment to uphold these will result in enforcement action and continued non-compliance may lead to termination. All Subway restaurant employees are entitled to payment for hours worked, including for training. 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.”

Subway staff who spoke to Fairfax reported a disinterest by the food retailer’s head office in workplace regulations at store level.

“The only things [Subway head office] care about is your name badge, your uniform, it is all about the image,” one employee said.

The news media reports also indicate a shrinking store footprint for the sandwich chain, and suggests franchisees are under pressure from reburbishment costs. The franchisor is taking a 360 rebrand approach to revitalise the business and one franchisee estimated the new look would cost her $200,000.

Underpayment not just a franchise issue

While tales of underpayment in the franchise sector have made headlines over the past few years, particularly in fast food, the issue of wages fraud or accidental error is found across the food retail scene.

More recently after the revelations that restaurateur George Colambaris was embroiled in a wages scandal the Prime Minister Scott Morrison weighed in to the debate with warnings misconduct could be considered a criminal offence.

But a data business has recently revealed that wage errors can be found in one third of firms. In almost half of all cases it is employees who alert the business and in 32 per cent of cases the CEO and CFO are unaware of the situation.