Pizza Hut delivery drivers have been underpaid, with the majority of the chain's outlets audited by the Fair Work Ombudsman failing to comply with workplace laws.
Of the 34 franchisees audited by the Ombudsman, 24 were found to be breaching workplace laws while only two were meeting all of their legal obligations to delivery staff.
The audit found that seven franchisees had misclassified delivery drivers as independent contractors rather than employees, meaning full entitlements were not paid.
As a result, a total of $12,086 in underpayments is owed to the Pizza Hut drivers after they were not paid the proper minimum hourly rate, or missed out on allowances for laundry.
Three franchise operators — two in Sydney and one at Mango Hill in Queensland — paid their workers on a "per delivery" basis at rates as low as $5.70 while failing to issue payslips and keep proper staff records.
Underpaid staff audited by the Ombudsman are mainly students, including a student visa holder from India.
Fair Work Ombudsman Natalie James said most of the 170 workers involved in the audit were aged under 24 and potentially vulnerable to workplace exploitation.
"We know that younger people, who have less experience in the workplace, are more likely to be unaware of their rights," Ms James said.
"The FWO will continue to monitor Pizza Hut outlets and will follow up with those identified through this process to ensure that areas of non-compliance are being addressed."
But Ms James told the ABC's AM program that Pizza Hut was yet to commit ensuring its workers are properly treated under workplace law.
"Pizza Hut has not at this stage stepped up and taken responsibility for the workplace arrangements in its network," Ms James said.
"We are hoping that they will take some action and sign on to a compliance partnership with us and take responsibility to ensure these vulnerable workers are being paid correctly."
External Link: Fair Work Ombudsman Natalie James with ABC's Samantha Donovan
Ms James confirmed she was considering legal action against one franchisee because of the seriousness of the workplace breaches identified in the audit.
The Pizza Hut underpayments follow a deeper scandal at the 7-Eleven convenience store chain, which has been forced to compensate 2,000 past and present staff who were ripped off.
The Ombudsman has issued three enforceable undertakings and 11 compliance notices to franchisees for underpaying delivery employees.
Fines totalling $6,300 have been imposed along with 17 formal letters demanding franchisees to rectify workplace non-compliance within their outlets.
Ms James said employees reluctant to complain about workplace breaches can now file an "anonymous report" for the Ombudsman's office to investigate.
The enforceable undertakings require franchisees to apologise to underpaid staff and to ensure that all are correctly engaged as employees rather than independent contractors.Pizza Hut says it is working to fix the problems
In a statement sent to the ABC, Pizza Hut Australia said it takes its responsibilities seriously and has been working with the Fair Work Ombudsman.
Chief executive Lisa Ransom said a third party payroll provider has been engaged, which franchisees will be able to use to ensure they comply with workplace law.
"Pizza Hut does not tolerate non-compliance and is committed to ensuring all franchisees meet their legal obligations," Ms Ransom said.
"We have also worked diligently to reinforce to franchisees their obligations as employers, ensure all the appropriate tools are in place for them to calculate rates of pay, and facilitate access to the Fair Work Ombudsman online training tools."
Ms Ransom said employees and contractors should speak up if they have concerns about their rights and rates of pay.