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Caltex threatens retailers over breaches

Caltex has not indicated any intention to set up a wage repayment tribunal, fuelling speculation about the company’s intentions.    Image: Ian Waldie/Getty Images.

Petroleum refiner and retailer Caltex Australia issued a warning to franchisees last year, only two days before Christmas, that their businesses would be audited in the New Year to check for employee wage underpayment.

An investigative report by AFR showed Caltex sent a letter about the upcoming audits to around 150 franchisees, sufficiently scaring more than 100 of them into seeking legal advice from three different law firms.

The letter instructed recipient franchisees to supply specific documents, including employee details, payroll records and rosters, to auditor Ernst and Young before January 25, this coming Wednesday.

“Caltex is taking allegations of breaches of workplace obligations within the Caltex network very seriously,” the letter said. It stated the entire retailer network would be audited over the next 18 months.

According to AFR, the letter fueled speculation that Caltex is initiating a “land grab” by targeting franchisees, in breach of the company’s Franchise Code, who will be liable to forfeit their investment back to the franchisor.

“Caltex reserves its right in respect of any default identified during the investigation and audit … to take immediate steps to terminate the franchise agreement [both in accordance with the Franchise Code and the Oil Code] or to conduct follow-up investigations and audits,” the letter said.

Like the 7-Eleven wage underpayment scandal, Caltex has identified incidences of franchisees paying attendants wages as low as $14 per hour, however it is understood that in a meeting in Sydney earlier this month, franchisees openly admitted to underpaying staff and blamed the need for such shortcuts on the franchise model.

A spokesperson for Caltex Australia told C&I that failure by franchisees to meet workplace obligations and uphold workplace rights was unacceptable to Caltex Australia.

“We continue to investigate every allegation received, cooperate with the Fair Work Ombudsman and other authorities, and implement a forensic audit program to detect and sanction wrong-doing, including the termination of franchise agreements where that is reasonable and appropriate,” she said.

“We are also conducting a holistic review of our franchise model and governance processes because we are absolutely committed to stamping out workplace wrong-doing in our network.

“Our actions to address workplace wrong-doing remain a work in progress and we will pursue the measures available to us to ensure the integrity of our network.”

Late last year BP announced it would acquire Woolworths Caltex service stations in a deal worth $1.8 billion, which will result in BP having a 37 per cent market share of the Australian fuel retail market, pending ACCC review.

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