A McDonald’s franchisee is removed from his four Auckland restaurants, as Newsroom reveals he was requiring staff to sign letters making them liable for $3000 if they left.

McDonald’s workers are feeling a sense of “relief” over the removal of the owner of four restaurants who was asking staff to sign agreements making them liable to pay $3000 if they left within a year. 

The fast food giant was notified of Prakash Hira’s conduct earlier this month following inquiries by Newsroom about workers receiving “commitment to employment” letters to cover hiring, onboarding, training and “several administrative” costs.  

The letter, signed by Hira, says: “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.”

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While it is unknown how many people were asked to sign these letters. A McDonald’s spokesman says it was aware of “a handful of people”. 

According to Unite union representing workers at the McDonald’s branches, these letters have been sent since 2019.

A former McDonald’s worker, who worked at Hira’s store, asked to be identified only as S, due to concerns over his visa status. He received a letter two years ago from Hira, he says, when he was promoted as store manager, asking him to pay a bond if he left within a year. 

Hira was also managing director of four McDonald’s stores in central Auckland locations: Quay St, Britomart, Queen St and point Chevalier.

S says he signed the letter and although he was a member of the union, he was too afraid to raise concerns about the letter with anyone over fear of losing his visa. 

He resigned last year, a year after his “commitment to employment” letter expired. S alleges the store’s manager, not Hira, often asked him to work on his days off and complete orders and deliveries using his personal vehicle without being reimbursed for costs.

He says the bond letter protected managers at the store, working under Hira, from repercussions for treating staff poorly as workers who had signed the contract thought they were legally obliged to stay.

But employment lawyer Rosamund Webby says the commitment letter is unlawful and “not worth the paper it’s been written on”. 

“If it’s signed, it is likely to be entirely incapable of being enforced,” Webby says.

Hira was stood down from operating the stores when McDonald’s became aware of the “unapproved policy” on May 14, a McDonald’s spokesman says. 

McDonald’s franchise terms and conditions allow franchisees to establish their own terms and conditions of employment. Photo: Unsplash

The company says it has decided to remove Hira from its system after concluding its investigation, and will continue operational management of the restaurants while it implements next steps.

Unite Union national director Mike Treen says he welcomes McDonald’s decision to remove Hira from its franchise system. But Treen says franchise models expose workers to exploitation, as terms set by franchisees that may be unlawful are ignored until publicly criticised.

Treen says the union would seek compensation for members who have paid Hira money promising to stay in employment.

According to McDonald’s franchise terms and conditions, franchisees hire their own employees and are allowed to “establish their own terms and conditions of employment, which may differ from those described”.

A current McDonald’s employee who works at the Britomart store and did not want to be named says he is aware of “multiple” workers being told verbally they would have to pay a bond if they left within a year, during the hiring and induction process, but were not asked to sign contracts.

The worker says staff are relieved, but he would like to see McDonald’s head office hold store managers to account for their behaviour toward staff. He alleges management ask migrant employees , in particular, to work on their days off.

“It’s a relief to hear he is gone, but ultimately we need more change than just Prakash losing the franchise to bring accountability and proper workplace conditions to the stores,” the worker says.

The Britomart worker says staff have been kept “in the dark” about the McDonald’s investigation into Hira. “On the day to day side of things, it’s like nothing ever happened. We were only given a one page letter last Thursday when the story broke,” he says.

That letter told staff McDonald’s head office was managing the restaurants due to an unapproved policy.

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.

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

Prakash Hira has been approached for comment.

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