Subway investigated for underpayments

13 August, 2019 by
Hospitality Magazine

Subway is under investigation by the Fair Work Ombudsman over employee underpayments and mistreatment of franchise owners.

It’s no secret the chain has been suffering, with close to 100 stores shutting down in recent few years.

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The Sydney Morning Herald reported franchisees are unhappy with expensive renovations costing upwards of $200,000 teamed with pricey equipment and exorbitant fees for the latest technology.

It’s alleged franchisees paid a $10,000 fee for a loyalty app and are constantly forking out for new equipment.

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One franchisee told SMH the coffee machine they purchased through Coca-Cola for $5000 was barely used and is now stored in a cupboard, with a panini press machine the latest cost.

“They push every time to buy new things … you have to buy this and that. We are not making money, we are just surviving,” said one owner.

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Subway addressed the claims in a statement, and said they make “no apology for innovating to increase the profitability of franchise owners and adapting to the changing needs of Australians.”

A number of employees have alleged they have been underpaid by Subway outlets, with The Young Workers Centre in Melbourne claiming they have received more than 24 complaints regarding the chain in the past year.

One former worker alleged he was underpaid at numerous Subway stores and was not compensated $50 for undergoing three rounds of training through the ‘Subway University’, an online portal that issues quizzes.

Former employee Renee McCarthy said she was underpaid $1300 over a three-year period with another employee claiming she is not paid overtime in her current role at Subway.

A Subway spokesperson said the onus was on Subway franchise owners, who are “expected to meet all regulatory, financial reporting, workplace and employment requirements. Franchise owners are required to conduct quarterly audits of their employment records and Subway conducts both proactive and responsive reviews of employment records.”

The spokesperson also said “non-compliance can lead to termination of an owner’s franchise agreement” and said Subway has a dedicated hotline for employees and provides employment support services to franchise owners.

Subway was in the spotlight last year during parliament’s inquiry into the operation and effectiveness of the Franchising Code of Conduct, with a former franchisee alleging he was forced to pay $3000 for a new POS system and thermometers priced at $250 when there were much cheaper alternatives available.