Domino’s staff get a bigger slice of the pie with penalty rates

IT’S BEEN an Aussie fast food success story, with tech innovations boosting sales. But Domino’s is about to take a major hit.

Domino’s is about to start paying staff penalty rates. Picture: Tara Croser

DOMINO’S is about to take a massive hit to its bottom line, after workers won a pay rise.

The pizza chain has just signed a new wage agreement granting staff weekend penalty rates for the first time.

Analysts have predicted that the move will push staff costs up by 14 per cent, and could hit the company’s profits by as much as 24 per cent.

“We believe penalty rates will need to be paid at some point which could have a significant impact on (Domino’s Australian stores) profitability,” a Deutsche Bank report said.

“If Domino’s were forced to pay penalty rates, in line with the award, it would represent a significant cost impost because the hours of operation generally extend into times which attract penalty rates.”

The deal comes six months after an 18-year-old Domino’s delivery driver was sacked for sharing an online petition for higher wages on his Facebook page.

The Change.org petition, by the father of a 19-year-old driver paid just $14.51 an hour plus $2.27 per delivery, demanded Workplace Relations Minister Michaelia Cash to “stop Domino’s paying delivery drivers below the minimum wage”.

“My 19-year-old son is paid $14.51 per hour for two hours per day, plus $2.27 per delivery,” he wrote. “He has to pay the cost of running his vehicle out of this $2.27. So per shift he is paid after expenses about $30.

“If he was paid the minimum wage he would work three hours at a payrate of $18.98 plus 41 cents per km for vehicle use. So he would earn after car running costs about $60.”

Mr Bornstein said while a breach of an employer’s social media policy could be grounds for termination, if a policy was “too extreme or is applied capriciously or unfairly, then a person may have ground to sue for unfair dismissal”.

In December, the company was accused of breaking child employment laws by pressuring underage employees to take a $2.37 pay cut or have their hours reduced — giving the 14-year-old workers an hourly rate of just $9.49.

Domino's boss Don Meij says it’s ‘business as usual’.

The Deutsche Bank report said Domino’s enterprise agreement, which expired in June 2013, paid a lower base rate than its rivals Pizza Hut, KFC and McDonald’s.

And, like its competitors, Domino’s doesn’t pay weekend penalty rates as set out in the Fast Food Industry Award, instead paying higher base rates under the EA.

But Domino’s chief executive Don Meij said the company’s bottom line would not be affected.

“Increases are not nice and you just want them to go through, and there’s a bit of anxiety about this,” Mr Meij told Fairfax Media.

“But this is business as usual. We’ve built this in. We are well and truly ready for this.”

Deutsche’s analysts predicted that Domino’s would survive the hit, thanks to its tech-focused push to increase sales.

“We don’t believe this will break the business given technology and product development should drive continued sales momentum.”

The report said that while Domino’s old wage agreement remained in force until a new one was signed, it was in need of catching up with the competition.

“We believe penalty rates will need to be paid at some point which could have a significant impact on (Domino’s Australian stores) profitability,” the report said.

“If Domino’s were forced to pay penalty rates, in line with the award, it would represent a significant cost impost because the hours of operation generally extend into times which attract penalty rates.”

The report said that while the increased wage costs were “technically a franchisee’s problem”, they would hit the company as a whole.

“In our view, Domino’s will need to share the pain given franchisee profitability has been a key element of its success,” the report said.

A statement from Domino’s said the company was having ongoing negotiations with the Shop, Distributive & Allied Employees trade union for a new EA, which began 12 months ago.

“The company has been fully aware and prepared for the expected changes in benefits and entitlements, to the point that both Domino’s and franchisees are set to increase rates in the interim while negotiations continue,” the statement said.

It said Domino’s was committed to delivering a modern agreement with more beneficial working conditions for all staff.

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