The 10 per cent surcharge on orders, which will be applied only on Sundays, is aimed at helping to absorb the costs of the wage increases, as the company tries to bring its pay rates in line with industry practice.

Domino's said the pay increase and surcharge were among a number of pricing models successfully tested on customers, and agreed on by franchisees.

The change also comes as franchisees are also coping with rising costs and mandatory store improvements.

Domino's has been working towards introducing penalty rates for the more than 12 months leading to concerns about the impact on franchisee profitability.

The company expects negotiations on a new enterprise agreement to be finalised in the first half of 2017, and blamed "significant disruption in the industrial relations environment" for the delay. It lifted the rates voluntarily.

"We value our employees and believe this voluntary increase is an important step in rewarding them for their commitment to our business and our customers," the company said.

"We are confident we will be able to finalise this process, and flourish.

"This voluntary increase is just one strategy we will implement to mitigate cost increases, and we are extremely confident the award modernisation process will be completed soon, and 2017 will be another record year for franchisees and employees."

In July, Deutsche Bank found that introducing penalty rates could reduce Domino's profitability by 24 per cent, noting that Pizza Hut and McDonald's paid 7 per cent higher base rates than Domino's. Domino's dismissed the report as "inaccurate" and said it was done without its input.

Staff have now been operating under an enterprise agreement more than three years out of date, leading Domino's to bring in "transitional" wage increases while it negotiated a new agreement.

Driving increases

On January 1 delivery drivers also received a 9 per cent increase to their base hourly rate, which followed an earlier pay increase in August.

The new Sunday pay rise will represent an increase of almost 40 per cent from this time last year, the company said.

Under the new system Sunday casual rates for adults will be between $29.16 and $29.47 and, at their lowest, between $14.58 and $14.73 for 15-year-old workers.

In December, UBS estimated a new enterprise agreement – factoring in a 50 per cent Sunday loading, a 25 per cent Saturday loading and 10 per cent overtime loading – would lead to a 15.6 per cent increase in franchisees' wage costs and might make franchisees reluctant to to invest in new stores.

The Fair Work Commission is due to make a landmark ruling on whether to align Saturday and Sunday penalty rates in a number of sectors including fast food in the coming weeks.

UBS also found Domino's would benefit from its technological innovations which placed it at least five years ahead of its competition.

Franchisee doubts

One franchisee, who wanted to remain anonymous because he is still in the Domino's network, said he was worried the benefit of the Sunday surcharge will be diminished by promotional offers mandated by Domino's head office.

"There is no surcharge in real terms if you are a customer that is subscribing to Domino's discounts. With the discount it is still under the menu price, and then on top of this we have to pay the employees a 25 per cent loading – it doesn't make sense," he said.

He said he wasn't sure whether the surcharge would make up for the increased wage bill but said he was worried increased prices would turn customers away.

"Profits are very tight, but I don't know yet how much it is affecting us," he said.

"I am going to get my family to work – what can I do. It is definitely going to make it harder ... I work eight to nine hours Friday to Saturday – now on Sunday I have to work if I have to make money."

Contact the author: mario.christodoulou@fairfaxmedia.com.au