Of 26 completed franchise audits, 24 were found to be non-compliant with only two meeting their legal obligations under workplace laws.

Seven of the 24 had classified their drivers as independent contractors rather than employees, with more than $12,000 in underpayments owed to workers.

The ombudsman found two franchises in Sydney and one in Mango Hill, Queensland, paid their drivers between $5.70 and $8 on a per-delivery basis and all three failed to issue pay slips.

A total of $6,300 in fines have been issued and the ombudsman is also considering potential litigation against one franchisee.

Ombudsman Natalie James said 32 per cent of the 170 workers looked at as part of the audit were under the age of 24.

“We know that younger people, who have less experience in the workplace are more likely to be unaware of their rights,” she said on Friday.

James said many franchisees were new to business and had asked around about the going rate, rather than checking what the law was.

“Pizza Hut has not at this stage stepped up and taken responsibility for the workplace arrangements in its network when it comes to the delivery drivers at least,” she told ABC radio.

“We are hoping that they will actually take some action and sign on to a compliance partnership with us, as 7-Eleven has done and take responsibility to ensure these vulnerable workers are being paid correctly.”

– AAP