CSR, Ethics & Sustainability: Caltex Australia's Wage Problem

This presentation examines the case of Caltex Australia and the unethical practice of wage underpayment within its franchise network. The presentation identifies the stakeholders affected, including shareholders, franchisees, employees, management, and customers. It explores potential solutions, such as transforming franchise sites into company-operated sites. Ethical theories, including utilitarianism, Kantian theory, and ethical relativism, are applied to analyze the situation, concluding that the underpayment of wages generates negative impacts for all stakeholders. The reflection emphasizes the importance of employees speaking out against unethical practices to protect the organization's reputation and ensure fair treatment.

Article review
PowerPoint Presentation
A case description of the application of poor business ethics
1. Organisation and the nature of unethical situation
Caltex private Limited an Australian business organisation is a leading company in transport
fuel supplying sector and supplies one third of all Australia’s transport fuel needs. The
organisation is well known for the supplying high-quality fuels to a variety of customer (retail,
mining, agriculture, aviation, transport, small-to-medium enterprises etc) (Caltex, 2018)
The organisation operates across Australia through its franchisees. Recently the organisation
has detected the presence of unethical behaviour in the form of underpayment of wage in the
different retail outlets that are working under the infrastructure of the organisation
2. How the issue was discovered
The issue was discovered when the Fair Work Ombudsman report of the organisation has
charged it with non-compliance of law. It was observed that 76% of the franchisees of the
organisation were practising under payment of wages (for the purpose of profit maximisation) to
the employees who are working in different retail outlets. This unethical practice was to impact
the image of the company in long run. [why? (and what is the purpose of the citation? Which
part of the sentence are you citing?)](Mescher,2011)[Is your answer here how the situation
has arisen, or is it how the situation was discovered? These aren’t the same thing.]
This citation is taken from an article that discusses the impact of unethical practices on the image
of an organisation from where it has been stated in the sentence that ‘This unethical practice was
to impact the image of the company in long run’
3. The stakeholders who are affected by the unethical situation

The major stakeholders who will be affected by the situation are as follows:
Shareholders: shareholder is owner of a part of the company through shares
Franchisees: franchisees are impacted by the performance of the organisation. in this case the
poor performance of other franchisees is going to impact the image of the organisation
negatively which in turn is going to impact the business of other franchisees
Employees: the employees draw their salary from the revenue of the organisation
Management: the management is responsible for the performance of the organisation and is
answerable to the shareholders
Customers: customers are considered as stakeholder because they take benefit from the
organisation in return of consideration
4. Possible ways of avoiding the unethical behaviour
The unethical practice of underpayment of wages to the employees of the retail outlet by
franchise holder is an illegal and immoral, which is eventually going to destroy the reputation of
the organisation.
To avoid the situation the management can transform the franchise sites in to company operation
sites (Kemp, 2011)
5. Application of the ethical theories for holding the analysis of the situation
The utilitarian theory: The theory suggests that an action to be considered as ethical or non-
ethical depending upon the quantity of positive consequence that has been generated compared
to the negative consequences. The utilitarian theory sets a standard for judging unethical
practices which takes into consideration a quantifiable measurement of the impact of a practice.
This method of judging the ethical standards is highly feasible for business organisations as they
aim to generate profit.
Kantian theory: Kantian Theory defines that an action or a situation is considered ethical if every
other individual can accept it as per universal law. This method of deciding the validity of an
unethical behaviour is also prevalent in business environment. If the apparent unethical practice

is common in the market than it is not important for an organisation to take action. But in this
case this is not a common practice to deprive employees and involves degradation of company
image and ultimate loss of profit hence action has to be taken by the organisation.
Ethical relativism theory: Ethical relativism theory suggests that whether an action is right or
wrong exclusively depends on the moral norms that stick on to the culture or custom of a
working society (My Portfolio, 2013). This theory also suggests a standard for judging the ethics
of an incidence. Even judging the incidence on the ethical relativism theory it can be said that the
deprivation of the employees from their rightful wages is against the ethical norms and thus
action should be taken by the organisation.
6. Summary statement
All the theories that are being discussed considers that the activity of wage under payment is
only generating negative impact for all the stake holders of the company
7. Reference
Caltex.(2018). Our Company | Caltex Australia. [Online] Available at:
https://www.caltex.com.au/our-company [Accessed 13 Apr. 2018].
Kemp, S., 2011.Corporate governance and corporate social responsibility: lessons from the land
of OZ. Journal of Management & Governance, 15(4), pp.539-556.
Mescher, B., 2011. The law, stakeholders and ethics: Their role in corporate
governance. Macquarie J. Bus.L., 8, p.37.
My Portfolio. (2013). Ethical Theory and Its Application to Contemporary Business Practice.
[online] Available at: https://ncys82.wordpress.com/2013/03/15/ethical-theory-and-its-
application-to-contemporary-business-practice/ [Accessed 13 Apr. 2018].
Reflection:
From the study of the above assignment, I understand that any kind of unethical practice like the
underpayment of wage to the employees of the organisation is unacceptable. This has happened

with the employees of the retail outlets under the franchise framework of the Australian
organisation of Caltex private Limited. This has destroyed the moral of the employees. This will
ultimately destroy the working quality of the employees who are working at the grass root and
the organisation will automatically lose its reputation due to the deterioration of the service or
quality of the organisation. So if I am working as an employee in an organisation then as stake
holders of the organisation I will try my level best to deliver the best service and at the same time
I will avail every other option that are available to me. This involves informing the top
management regarding any kind of unethical work or any kind of exploitation that has occurred
with me or has happened with any of my fellow workers. Because, the unlawful activities taking
place in the organisation will gradually hit the reputation of working quality of the organisation
and exploitation will lead to the generation of the dis-satisfied employees within the organisation
who will never be able to deliver their full effort for the attainment of the organisational goal. As
an employee or stakeholder of the organisation if anything wrong is going on within the
organisation then it will also affect me negatively and therefore it is my duty to raise my voice
against the unethical activities that are going on within the organisation.