Employment Relations Authority slams Subway chain after Northland franchise fined for worker exploitation

The Employment Relations Authority has warned that Subway franchises in New Zealand can expect to see greater scrutiny from the agency after a Dargaville franchisee was ordered to pay nearly $10,000 in penalties and costs. The business was accused of breaching the Holidays Act and failing to comply with a improvement notice issued by an ERA inspector.

A file image of a courtroom. Source: 1 NEWS

An inspector visited the franchise as part of an audit in 2017 and found the store was not providing staff with correct pay for working on public holidays and was not providing days in lieu, the agency said in a statement.

The inspector issued an improvement notice for the store, which required Healthtop Limited, trading as Subway Dargaville, to rectify its practices and calculate arrears to workers. A case was lodged with the ERA after Healthop Ltd. failed to comply with the notice.

An ERA investigation found that most of Healthtop's employees were school or university students, leaving them vulnerable to exploitation. It also found that Healthtop benefitted financially by not paying staff their entitlements when they were due.

"Subway Dargaville was given an opportunity to set things right but they chose not to do so," Labour Inspectorate regional manager Callum McMillan said in the statement.

"Consumers are becoming more conscious of the ethics of the businesses from which they buy," Mr McMillan said. "It's baffling that a highly visible brand such as Subway does not have assurance systems in place to ensure franchisees meet employment standards and comply with demands by the regulator.

"It also raises questions about Subway's due diligence processes for those joining the brand."

Mr McMillan said other Subway franchises "can expect to be a priority focus for the Labour Inspectorate" as a result of their "obvious lack of oversight".

Healthtop was ordered to pay $7000 in penalties and $2,225 in costs. The store has 21 days to comply with the issued improvement notice.