Oil giant Caltex tipped off its service station owners that they were about to be raided by the workplace regulator amid allegations of intimidation and systemic wage fraud.

A Fairfax Media investigation can reveal  some petrol station workers are being paid in cash, as little as $12 an hour, and sleeping in beds at the back of the store when their shift ends. Many are being threatened with deportation if they speak up.

Fairfax Media is also aware of one worker whose family in Pakistan has been threatened by associates of Caltex franchisee owners in Australia. He is now fearful of speaking out to authorities or the media in case the threats of violence against his family are carried out.

A letter obtained by Fairfax Media reveals that the Fair Work Ombudsman, which enforces minimum pay rates across Australia, gave Caltex advanced warning that it was going to raid its service stations across the country.

Caltex passed the information on to its franchisees, to prepare them for the “unannounced” raids this week.

“Caltex has been notified by the Fair Work Ombudsman (FWO) that they will be commencing unannounced site audits across our Franchise and Calstores national network and these audits will commence from as early as next week,” Caltex wrote to franchisees on October 19.

Tipped off

Fair Work said it gave Caltex advanced warning of the raids “in order to promote compliance across the Caltex network” and to “encourage Caltex to message its entire network that it could expect a site visit by the Fair Work Ombudsman.”

It said Caltex was not advised of the outlets, dates or times associated with the site visits.

Service station workers told Fairfax Media they had been instructed by their bosses to lie to Fair Work inspectors about their pay rates, to cover up systemic wage fraud across the network.

“My manager asked me ‘don’t tell anyone my real pay rate’,” one current employee said. He said he has been threatened with deportation if he speaks out.

The raids come more than a year after convenience store network 7-Eleven was exposed underpaying workers and falsifying payroll records in the country’s biggest wage fraud scandal.

Over the past 12 months Caltex has been systematically auditing franchisees, targeting those with “administrative anomalies”.

So far, of the eight franchisees it has audited, five have been terminated after they were found to have either “deliberately underpaid” workers or otherwise breached their franchise agreement.

Action supported

The company said in a statement it fully supported FWO’s raids and told its franchisees and its own operated network to fully cooperate.

“In cases of fraudulent or deliberate misbehaviour, we have not hesitated to terminate our agreement with any such franchisee,” it said.

The company said it proactively contacted the FWO 12 months ago and had kept the regulator regularly updated.

Caltex is a listed company on the Australian Securities Exchange. It has more than 796 sites, which includes 650 franchised sites and the rest Caltex controlled sites.

It has made an offer to buy Woolworths’ 530 service stations, which, if successful, would make Caltex the biggest service station operator in the country with a market share of more than 34 per cent. Caltex reported a half-year profit of $318 million, compared with $375 million in the previous corresponding period.

Paid $12 an hour

Fairfax Media can reveal that some workers, mostly students from Pakistan and India on student visas, have been paid as little as $12 an hour.

Syed Aqeel said he was paid $12 an hour when he began at the Grange Caltex station in Adelaide in 2012. The accounting student, from Pakistan, worked overnight shifts. If a customer drove away without paying for petrol, he says the franchisee made him pay for it.

“We stand there for eight-hour and ten-hour shifts and we are getting nothing, and if someone drives off, you have to pay out your whole shift money,” he said.

Mr Aqeel, who worked for a number of Caltex stations over the past four years, said for some of that time he was paid in cash using an elaborate system.

Another worker, who declined to be identified, said he was paid around $13 dollars an hour when he worked for various Caltex stores.

Below minimum wage

This is well below the weekday part-time rate of $17.70 an hour on weekdays and $26.55 on weekends. For casuals the rate is $23.32 an hour increasing to $30.42 on weekends and public holidays.

He said the overnight shift could be dangerous work, including the risk of armed robberies.

“One of my colleagues was beaten up by some people in Clearview. One person got held up. A female staff member, she had a really bad situation,” he said.

“A guy came with a knife and she paid him $600.”

He said he was asked to lie to anyone who asked about his pay rate.

“I never raised my voice or stood against them. They know the loophole and they abuse the system and they know the psyche of our culture.”

Regulator action

In South Australia, Fairfax Media is aware of claims employees are being paid as little as $13 dollars an hour using bags of cash at some Caltex service stations.

In 2012 the regulator found that service stations run by one of Caltex’s largest franchisee groups with sites across NSW and South Australia, had underpaid 20 workers.

The franchisee had to refund $18,367 to the workers and the regulator wrote a letter of caution. In 2015 Fair Work conducted another raid of the group’s sites but found minimal issues.

The allegations come as Caltex is fighting another battle with workers at a site in Lytton that manufactures lubricants for motor oils.

Members of the National Union of Workers (NUW) have gone on strike indefinitely, NUW’s industrial officer Dario Mujkic said, after Caltex attempted to cut workers wages by 15 per cent. “We are calling it Caltex Greed,” he said.

Caltex has had a history of controversy with its franchisees. In 2004 hundreds of franchisees threatened legal action, alleging a discount petrol contract with Woolworths would hurt them financially.

An internal Caltex head office document leaked to media outlets in 2004 recommended instilling “fear, uncertainty and doubt” in franchisees, with the aim of securing Caltex the best possible deal for its discount petrol link-up with Woolworths.

It prompted Caltex at the time to issue an apology and make a statement: “While the contents of the memorandum were unacceptable and Caltex has suffered damage to its reputation, it is fortunate the effects on Caltex and franchisees were not worse.”

Extracted from The Age.