Pizza Hut, the second largest pizza delivery chain in Australia, is facing allegations of using sham contracts following reports of few of its franchisees are underpaying their delivery drivers. The drivers are reportedly being paid as less as $12 per hour, whereas the enterprise had agreed on an agreement that promised to pay full-time delivery drivers $20 and casual employees $25 an hour.

Fairfax Media reported that the Pizza Hut contract entitled the delivery drivers $6 per delivery, restricting the number of deliveries to a maximum number of two per hour. The franchisees are reportedly locked in a legal battle with the head office in the Federal Court. The group of franchisees launched a class action lawsuit against the parent company Yum! Restaurants, seeking damages caused by Pizza Hut’s strategy of discount pricing.

ABC PM had earlier broken the story on Friday, after a number of Pizza Hut delivery drivers told the program they were paid below the minimum wage. One driver, Lachlan Forsberg, said he was paid $5 a delivery, and that he had to drive his own car and pay for his own insurance and petrol. Under the Fast Food Industry Award, Forsberg should have been paid $18.98 an hour, and given an allowance of 41 cents per kilometre.

Pizza Hut is the latest in the line of companies facing charges of wrong employment practices. Last week, the Federal Circuit Court had ordered a company to pay a compensation of $20,400 for allowing one of its contractors to underpay a guard.

Shane Wescott, solicitor at Patron Legal, said that he hopes that regulators would henceforth keep a close watch on the terms laid out by companies in contracts to avoid such cases.

“I think we will see the Fair Work Ombudsman crack down [on this issue],” the SmartCompany quoted Wescott as saying. “They’ve indicated this is an area that they are going to focus on. I also think that, generally, companies are always increasingly looking to outsource their employment law obligations – be that through contracts directly or through labour hire agencies.”

A spokesperson for Fair Work Ombudsman said that it is aware of the allegations brought against Pizza Hut and is inquiring into it.

“We have not seen the contract referred to in media coverage and therefore cannot make specific comments at this stage,” General Manager of Pizza Hut Graeme Houston said. “We take these claims very seriously and will ensure our investigation is a priority for the business.”

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