Poor assurances can endanger brands

25 October 2017

Inspectorate warns businesses that poor assurances can endanger brands

The Labour Inspectorate is calling for large brands and franchisors to take a stronger hand in ensuring those at the bottom of their supply chain receive what they’re owed.

This comes after the employees of 17 Caltex stations in Auckland were paid more than $125,000 as a result of a Labour Inspectorate investigation revealing substantive minimum wage breaches and other systemic breaches.

“Franchisors and large businesses should take steps to ensure all workers associated with their brand are being paid correctly,” says Labour Inspectorate regional manager Loua Ward.

“Failing to seek sufficient assurances can open the door to operators who don’t take care to meet all their obligations, like paying the correct minimum wage – a poor look for any business.

“Businesses which choose to loan out their brand for profit, such as franchisors, should use their position to resolve these kinds of employment issues before they happen.

“These kinds of cases can cast a cloud over a business long after the workers have been paid back, as ultimately it meant employees associated with your brand were left out of pocket.

“It’s always surprising and disappointing to find well established and high profile organisations failing to ensure such basic compliance is occurring.”

Poor systems in place at the stations had meant holiday pay and minimum wage were not correctly paid, and 232 former and current employees were owed arrears.

The 17 stations were owned by six companies with a single set of directors, Sanjai Bagia and Dipak Bagia.

An enforceable undertaking entered into with the Labour Inspectorate requiring the companies to fix their systems has been complied with, and all of the $125,659 in arrears paid.

The Labour Inspectorate notes the National Consumer Survey 2016, conducted by Consumer Protection, found that knowing a business treats its workers fairly (for example pays at least minimum wage, provides a safe workplace) regularly affects consumers’ purchasing decisions.

Forty-three percent of consumers said that knowing a business treats its workers fairly affects their decision on where to purchase ‘always’ or ‘most of the time’, whereas 11 per cent said that it ‘never’ affects their purchasing decisions.

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

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