Underpayment at Caltex sites could be in the ‘millions of dollars’, Fair Work Ombudsman says

MORE than three quarters of Caltex sites are in breach of workplace laws, according to a damning report by the Fair Work Ombudsman.

CALTEX has been accused of running an “unsustainable” business model, with three quarters of its service stations found to be in breach of workplace laws.

In a report on Monday, the Fair Work Ombudsman said an audit of 25 Caltex sites in Brisbane, Sydney, Melbourne and Adelaide found just six to be compliant, a noncompliance rate of 76 per cent.

It comes just days after the company announced it was spending $120 million buying out its franchisees to move to an entirely company-owned model — but claimed the move had nothing to do with staff underpayment issues.

“In light of this alarmingly high level of noncompliance across its retail fuel outlets, I am not surprised by Caltex’s announcement to the ASX last week that it will transition franchise sites to company operations,” Fair Work Ombudsman Natalie James said in a statement.

“FWO’s report shows Caltex Australia has been presiding over a non-compliant and unsustainable operating model.”

Caltex hit back, saying the 25 sites were “not a representation of the network of approximately 1900 Caltex owned or affiliated sites across Australia”.

“Caltex is concerned about the comments made by the FWO, as our view is that the regulator and industry — and others — need to work constructively if we wish to eradicate wage underpayment,” a spokeswoman said.

“Caltex has a strong record of good engagement with other regulators and believes constructive engagement between industry and our regulators is important.”

Fair Work said it had issued nine infringement notices, 11 compliance notices and 16 formal cautions to non-compliant franchisees, and recovered $9330 in back-pay for 26 workers. Ms James said the figure would be higher if the underpayments could be accurately calculated.

“There’s no question that if these findings indicate the norm in this network, and if these underpayments are replicated throughout the business month after month, we are quickly looking at millions of dollars of underpayments over the course of a few years,” Ms James said.

“A large number of employees at the audited sites are young and migrant workers, cohorts that we know to be particularly vulnerable to workplace exploitation and reluctant to complain about mistreatment.

“Sixty per cent of the 194 employees the Fair Work Ombudsman obtained records for were visa holders and nearly 26 per cent under the age of 24.”

Fair Work said its inspectors found evidence of underpayment of wages, non-payment of overtime and penalty rates as well as record keeping and pay slip breaches.

Legal proceedings have commenced against two franchisees for allegedly providing falsified records — the former operator of the Caltex Five Dock service station in Sydney, Aulion Pty Ltd, and Abdul Wahid and Sons Pty Ltd, the former franchisee of a number of Caltex outlets in Sydney.

The Caltex spokeswoman said the company had established an audit process and an independently run whistleblower hotline in 2016, along with an assistance fund for franchisee employees who had been underpaid.

She said 292 sites had so far been audited. The assistance fund had received a total of 269 claims related to 84 sites. Of those, 155 had so far been approved, 81 were in progress and 21 had been rejected, with the average claimant being reimbursed $25,800.

“Caltex has consistently said we are committed to stamping out wage underpayment anywhere in our network and that is why our workplace audits are mandatory,” she said.

“The Caltex audit program is working and we are committed to continue. Wage underpayment is declining, underpaid workers from exited sites have access to our employee assistance fund and over 875 people have now come to work directly for Caltex.

“Since instances of wage underpayment in our franchise network first emerged in 2016, Caltex has been very clear — unlawful behaviour would not be tolerated and we will act decisively to remove the practice from our franchise network. This work continues.”

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