McDonald's accused of using zero hour contracts to game Work and Income subsidies

Albie Campbell leads chants as McDonald's workers protest zero hour contracts at a rally earlier this year.
ASHTEN MACDONALD/FAIRFAX NZ

Albie Campbell leads chants as McDonald's workers protest zero hour contracts at a rally earlier this year.

Unions claim that fast food companies have been paid huge taxpayer subsidies to hire beneficiaries, only to allegedly put them on zero hour contracts.

Work and Income offers businesses "flexi wage" subsidies to help jobseekers find work.

Figures released under the Official Information Act reveal McDonald's received $527,000 of the subsidies over the last six years.

That sum only covers 20 per cent of the fast food chain's stores, with the majority owned by franchisees.

If those restaurants took advantage of the subsidies at the same rate, the total would be more than $2.6 million.

The Ministry of Social Development (MSD) refused to provide the overall figure, saying it would require a "substantial manual collation" of data.

McDonald's spokeswoman  Kim Bartlett said the company would investigate if it received a claim, but the issue had not been raised.

Unite Union national director Mike Treen said some McDonald's franchises and other fast food restaurants hired almost exclusively from Work and Income.

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The union had heard of several cases where the guaranteed hours offered would only last as long as the subsidy, typically six months, Treen said.

Former beneficiaries would then have their shifts slashed from the minimum 30 hours a week, and be put on zero hour contracts with everyone else.

Treen said taking away guaranteed hours was as much about controlling workers as it was about milking taxpayers subsidies.

"It was just to keep everybody jumping: 'Yes sir, no sir, three bags full sir'."

Jordan Williams, executive director of the Taxpayers' Union, said it was not the Government's job to dole out corporate welfare.

"If that [gaming] is happening, it's not only a complete failure by officials and the Government, it's clearly unethical on the side of McDonald's, or the commercial party," he said.

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Not all McDonald's restaurants that hired through Work and Income used the subsidies, Bartlett said.

One example was South Auckland franchisee Geoff Turner, who owned and operated four restaurants in Manukau and was focused on getting people back into work.

Bartlett said McDonald's employees had a range of options for raising issues, and the new collective agreement would give workers security of hours.

Treen said the issues should be fixed in part by the historic settlement, which was hammered out between the parties after strike action earlier in the year.

McDonald's will now be required to offer additional hours to existing staff before hiring new workers.

Treen said the union had fought for similar clauses before, but the "ongoing tussle" was difficult to police.

The introduction of guaranteed hours of at least 80 per cent would allow the union to track whether McDonald's was keeping its word, he said.

Burger King stores, excluding franchises, received $62,430 over of the same time period, but nothing in the last two financial years.

Marketing manager Chet Patel said Antares Restaurant Group, which owns 81 of the 84 restaurants, was unaware of any Work and Income subsidies.

KFC and Starbucks, owned by Restaurant Brands, received $31,424, with the subsidies also drying up in recent years.

An MSD spokesman said Work and Income only referred people to employers with legitimate job offers, where the contract terms and conditions "meet current employment legislation".

Zero hour contracts remain legal after the Government's legislative changes fell short of banning them.

The spokesman said employers had to sign a formal agreement outlining the terms and conditions of accepting a wage subsidy.

"These agreements are entered into in good faith – and any breach of the terms would have an impact on our consideration for any future subsidy," he said.

 - Stuff

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