Labour Inspectorate challenges Subway franchise

Media release

31 July 2019

Labour Inspectorate challenges Subway franchise to comply with employment standards

The Employment Relations Authority (ERA) has ordered Healthtop Limited trading as Subway Dargaville, to pay nearly $10,000 in penalties and costs for breaches of the Holidays Act, and failure to comply with a Labour Inspectorate improvement notice.

The Inspectorate visited the Subway store as part of a proactive audit in 2017 and found it was not providing staff with correct pay for working public holidays, nor was it providing them with days in lieu. The Inspectorate subsequently issued an improvement notice requiring Healthtop to rectify its practices and calculate arrears to workers.

When Healthtop failed to comply with the improvement notice, the Inspectorate lodged the case with the ERA.

“Subway Dargaville was given an opportunity to set things right but they chose not to do so. The ERA ruling sends a clear message that ignoring the Labour Inspectorate will result in substantial penalties,” says Labour Inspectorate Regional Manager Callum McMillan.

“Consumers are becoming more conscious of the ethics of the businesses from which they buy. 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.

“As a result of this obvious lack of oversight, Subway franchisees can expect to be a priority focus for the Labour Inspectorate,” said Mr McMillan.

The ERA found that most employees of Healthtop were school or university students, and as such are particularly vulnerable. It also found Healthtop gained financial benefit by not paying its employees their entitlements when they were due.

The determination orders Healthtop to pay $7,000 in penalties and $2,225 in costs, with 21 days to comply with the issued improvement notice.

MBIE encourages anyone concerned about the employment situation of themselves or someone they know to call its contact centre on 0800 20 90 20, where their concerns will be handled in a safe environment.

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