Caltex CEO vents frustration at Fair Work Ombudsman

Angela Macdonald-Smith
April 12, 2018
AFR

Caltex chief executive Julian Segal has hit out at the Fair Work Ombudsman over its handling of the wage underpayment problem plaguing the fuel supplier’s franchise network, blaming the regulator for an unconstructive relationship that has had the effect of harming public confidence in the system.

In a speech to a business luncheon in Sydney on Thursday, Mr Segal voiced frustration at the more than two years it took for the workplace regulator to agree to a meeting with the Ombudsman, Natalie James.

He also took aim at the way it has handled the release of its findings, releasing them to select media before informing the company itself.

“I find it frustrating that the regulator has chosen to deal through the media, most recently by releasing a compliance monitoring report to select commentators before making it available to Caltex,” Mr Segal said.

“Across our business we are heavily regulated by a number of technical, economic, safety and environmental regulatory bodies, and I can confidently say that, with the exception of the FWO, we have a constructive and respectful working relationship with all of them.”

The ombudsman has been investigating worker exploitation across a large number of Caltex franchisees, finding a 76 per cent failure rate from 25 stories audited, although not all of those related to wage underpayment. The findings were released exclusively in The Australian Financial Review after Fairfax Media exposed the wage fraud scandal in late 2016. 

The regulator responded by calling on Caltex to “engage seriously” in discussing a compliance “partnership” with the Ombudsman.

“Representatives from the Fair Work Ombudsman have met with Caltex executives several times over the past two years and invited Caltex to publicly commit to measures to address the non-compliance issues in their network by entering into a compliance partnership with the Fair Work Ombudsman,” a spokesman said. 

“The Fair Work Ombudsman calls on Caltex to engage seriously in discussing the offer of a compliance partnership so that the Fair Work Ombudsman and the Australian community can be confident Caltex is operating openly and with full accountability.”

Mr Segal fully acknowledged the problem, describing the rate of non-compliance uncovered in Caltex’s audit of 292 sites as “shockingly high”. Non-compliance reached up to 80 per cent in the first sites exposed by whistleblowers, and has since fallen to a still-unacceptable 45 per cent, he said.

“The improved compliance rate tells me we were quick to deal with the bad apples first, and that our actions are having the right impact to remove wage underpayment from our franchise network,” he said, noting that several franchise agreements have been scrapped.

Caltex’s decision announced in February to end the franchise system has been linked to the problems in the network, but Mr Segal reiterated that it is not connected but part of the company’s transition to making convenience retailing a “core business”.

As it beefs up in the area, Caltex is leaning on skills from employees who have worked for major retailers including Tesco and Asda in Britain, Watson’s in Hong Kong and Coles in Australia.

“Convenience retail represents a great opportunity for us in Australia,” he said.

“The convenience spend in the UK, for example is around five to six times what it is here. Their offer is richer and there is much for us to learn from overseas examples about what more we can provide to customers.”

Caltex has built up a network so far of 11 non-fuel sites, including Nashi sandwich bars and The Foodary stores that have nothing to do with petrol retailing.

Mr Segal also noted that Caltex has a digital team at the Sydney Start Up Hub in Wynyard developing apps intended to “make life easier”, such as a new fuel app involving number plate recognition. The technology is being trialled in an express lane service at Caltex’s Concord station in Sydney’s inner west, where drivers can fill up and drive off with automatic payment as long as their plate number is entered on the app. 

“Watch this space,” he said. 

Caltex is meanwhile still awaiting a decision from BP on whether it will appeal the competition regulator’s vetoing of its $1.8 billion purchase of Woolworths’ petrol station network. The sale of that network would end Caltex’s large wholesale supply contract with Woolworths, which yields about $150 million in annual earnings. 

BP is expected to decide within weeks whether to launch a legal challenge to the Australian Competition and Consumer Commission’s verdict.