Many Freshii customers have already encountered “Percy.”

The video-calling device is attached to cash registers at a select few Freshii locations across Ontario, and it lights up when customers approach the counter.

On the other end of the screen is a cashier wearing a headset, ready to take orders. Unlike the Freshii workers that wrap burritos and mop floors, these “virtual” workers are nowhere near the store. Instead, at least some of them process orders from a Nicaraguan call centre nearly 6,000 km away, where they earn much less than Ontario’s minimum wage.

The program is only in the early stages of testing, but Freshii’s virtual cashiers are part of a wave of outsourcing and automated technology that is slowly changing Canada’s retail industry.

For many Ontario retail workers, the implications of these innovations raise a daunting question: how secure is my job?

Freshii, a franchise with 343 restaurants across North America, declined to provide details to the Star about its virtual cashier technology, but in a statement, Freshii’s chief business development officer Paul Hughes said Percy is operated by a third-party company.

“Just like with Uber Eats, Skip the Dishes, self-checkout options and other emerging ordering/cashier technologies, Freshii is always looking to be an early tester and adopter of new tech solutions that might make it easier for our customers to order healthy meals and our franchise partners to run more successful restaurants,” Hughes said.

The company has not previously spoken publicly about the program, other than to mention several “labour optimization programs in development” that it hopes will “further assist partners in managing costs and protecting profitability,” in a recent corporate filing.

But employees at the company’s franchise locations told the Star they’ve been aware of the program since November. The Star verified three locations in Ontario that use these virtual cashiers — two in Toronto and one in Waterloo. One of the locations, in Toronto’s Rosedale neighbourhood, has been using a Percy cashier since January.

Two virtual cashiers who spoke with the Star said they are located in Nicaragua, where they work at a call centre that pays them $3.75 (U.S.) an hour.

In North America, Freshii typically hires for server positions that pay between $12 to $16 an hour, according to data collected by Glassdoor, an American jobs search website. In Ontario, where the minimum wage is $15 (Canadian), Freshii’s virtual cashier program could potentially save the company $10 or more an hour.

The practice is entirely legal, multiple employment lawyers told the Star.

“It’s just like any other kind of outsourcing: if you’re sending jobs to people in a different country, you’re only obligated to comply with the labour standards of that country,” said Jonathan Pinkus, an employment lawyer and partner at Samfiru Tumarkin LLP. “Being virtually present in Ontario doesn’t change that.”

Ontario’s Employment Standards Act is applied to workers who are either working in Ontario or performing work outside Ontario that is deemed a “continuation” of work performed in Ontario.

Freshii is likely relying on the argument that their cashiers’ work is not a continuation of work performed in Ontario, but rather another task that call centre workers can complete in another jurisdiction, said Michael Wright, a lawyer and founding partner at Wright Henry LLP.

Still, the program drew outrage from labour organizers who see the practice as a way to circumvent Ontario’s minimum wage laws.

“Shipping jobs to an offshore location to pay less than a third of our minimum wage here is just extremely disappointing, and, quite frankly, I’m disgusted a company like Freshii would take this approach,” said Bea Bruske, president of the Canadian Labour Congress.

“We need jobs that pay taxes in Canada and that help boost our economic activity.”

An increase in outsourcing and automation may prove to be one of the COVID-19 pandemic’s economic legacies. From factories to fast-food chains, businesses turned to technology to keep operations afloat amidst physical distancing measures and tight labour markets.

Some of those changes have sparked curious innovations. Sobeys introduced “smart carts”: shopping carts that scan shoppers’ items, track total bills, accept payment and let them skip the checkout line. Late last year, Dark Horse Espresso opened a chain of “robo-cafes” around Toronto — autonomous, contactless machines that occupy street-facing retail space and spit out lattes.

Research on Canadian automation contains mixed findings. A report released on Monday by the Centre for Future Work titled “Where Are The Robots?” argued that Canadian businesses have been slow to invest in automation over the past two decades, reducing the impact of robots and automated technology on the labour force.

The report finds that business investment innovation as a share of GDP has declined dramatically over the past 20 years, from 2.3 per cent in 2001 to 1.8 per cent in 2021.

Sector-specific research, meanwhile, has detected a drop in jobs in grocery stores and food retail. A recent report from the Brookfield Institute for Innovation and Entrepreneurship at Ryerson University found a 15 per cent drop in full-time positions at grocery stores between 2006 and 2016 — mostly from customer-facing roles.

More broadly, a report published by the International Monetary Fund last year predicted that pandemic-era automation would increase global inequality in the coming years.

Some companies have relied on outsourcing, rather than automation, to reduce labour costs. The wage differences between Canada and some countries in the southern nations are stark, making offshoring a difficult prospect to resist.

While a call centre worker in Ontario earns a minimum $15 an hour, a worker in India earns on average $0.35 (Canadian) an hour, a worker in the Philippines earns $1.65 an hour and a worker in Bangladesh earns $0.11 an hour.

“Employees were forced to work remotely during the pandemic, whether they liked it or not, and companies have realized it’s easier than ever now to send that work overseas,” said Bruske.

In a statement, Ontario Minister of Labour, Training and Skills Development Monte McNaughton called the virtual cashier program “outrageous.”

“This ... moves entirely in the wrong direction. I expect better from a Toronto-based company and know customers will vote with their feet,” he said.”

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