The owner of four McDonald’s franchises in Auckland has been accused of bonded labour through dodgy contracts

Workers at McDonald’s stores in Auckland were surprised to hear their boss has been asking some staff to sign contracts that made them liable to pay thousands of dollars if they left within a year.

Prakash Hira, the managing director of four McDonald’s stores – Britomart, Quay St, Queen St and Point Chevalier – has been asking staff to commit to a minimum of 12 months’ employment with the company and pay $3000 if their employment was terminated either by the workers or by him. 

A “commitment to employment” letter seen by Newsroom says the $3000 covered the “hiring/onboarding and training … orientation/follow-up orientation, training plans and time spent training, uniform costs as well as several administrative costs”.

“Should you choose to terminate your employment or if for some reason your employment is terminated within 12 months of your commencement date of employment, then you are liable to paying the company a total of $3000,” the letter says.

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The union representing McDonald’s workers Unite Union says these letters have been sent to staff since 2019.

Unite Union’s Mike Treen says the contracts amounted to “bonded labour”.

Treen says not all staff had been sent these contracts but the union was not yet aware of how many staff had been sent these letters.

He says the letter is “completely illegal” and shouldn’t be signed. 

A worker, who did not want to be named, received this letter and was told their resignation was conditional on the $3000 payment.

“The letter isn’t worth the paper it’s written on,” employment lawyer Rosamund Webby says.

The worker resigned because they felt they were being treated unfairly. 

A McDonald’s spokesman says the head office was made aware of Hira creating a policy not approved or supported by McDonald’s.

The spokesman says Hira has been stood down while McDonald’s NZ investigates the matter.

“McDonald’s corporate staff will be liaising with employees at the affected restaurants, to offer support and manage the restaurants while the investigation takes place.”

Last year Hira tried to cut workers’ hours by 20 percent after hiring 28 new staff, and giving them more hours of work without offering existing staff more hours first, Treen says.

At the time, Hira claimed the cuts were necessary because “the restaurant has been impacted through the various Covid alert levels” and blamed power distribution company Vector for a delay in his new restaurant opening on Queen St.

He refused to be interviewed over the phone and directed Newsroom to contact him via email. 

Dundas Street Employment Law partner Rosamund Webby says the letter appeared to be in breach of the Wages Protection Act 1983, which made it unlawful to charge an employee or prospective employee to give them employment.

“All of these costs are costs incurred simply in employing and ensuring a person can perform the basic job. Not added bonus extras that the employer doesn’t really need to offer,” Webby says.

“My advice to any prospective employee of this outfit is that the letter isn’t worth the paper it’s written on as the arrangement is likely unlawful, and if it’s signed, it is likely to be entirely incapable of being enforced.”

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