Home' The Franchise Review : December 2015 Contents THE FRANCHISE REVIEW
The exploitation of workers at chicken
factories, of cashiers at convenience
stores, of pickers at blueberry farms and of
cleaners at department stores has been in
the headlines of late.
Of course, it is the direct employers of these workers who are
responsible for making sure that they get paid correctly. But
the response to these events shows that the media and the
community are noticing when there is a big name at the top
of these supply chains or at the centre of these arrangements.
7 Eleven, the major supermarkets and established big name
department stores have all had a light shone on their
arrangements, and the contribution these arrangements might
have made to the exploitation of vulnerable workers.
In the eyes of the community, a business has a moral and
ethical responsibility to its workforce, regardless of the
arrangements it has put in place and questions of legal
responsibility. The standard response by the big names that 'we
aren't responsible' hasn't washed in the community.
Our experience is that, in highly competitive environments,
some unscrupulous operators set out to gain a competitive
advantage by paying unlawful black market rates to low skilled,
vulnerable employees -- especially migrant workers -- to reduce
their most significant business cost: labour.
We know from our strong and longstanding relationship with
the Franchise Council of Australia (FCA) that franchisors are
looking to do the right thing, and to make sure their franchisees
are, too -- because your reputation and your brand are your
most valuable asset. So it makes good business sense to assure
yourself that your franchise is compliant with workplace laws.
The Fair Work Ombudsman (FWO) and the FCA are exploring
how we can work together in assisting you to take active
steps to ensure that your networks are compliant. We see an
opportunity to build a culture of compliance with workplace
laws throughout franchise operations, and show the public that
you are serious about doing the right thing by the workers in
It's not just your reputation that may be at stake. There
are circumstances in which the business at the top -- the
franchisor, principal or purchaser -- may be legally responsible.
If you are 'involved' in a contravention, a court could find that
you are an accessory, and you could be the subject of fines.
While my office will vigorously pursue the direct employer, we
will also examine the extent to which other businesses were
involved, and should also be held responsible -- like we did
when we took Coles to court over the underpayment of its
trolley collectors, who were engaged by subcontractors.
If we find a business that is underpaying its workers, and that
business is part of a franchise or supply chain, we look to the
business at the top -- the franchisor, principal or purchaser
-- because they are the 'price maker', and they control the
We will use a range of levers -- reputational, structural,
environmental and, where necessary, legal -- to achieve
behavioural change from the top down, and to get the
franchisor, principal or purchaser to step up and take
responsibility for what's happening in their franchise network or
This approach gets to the real cause (and beneficiary) of the
non compliance. Following a top down inquiry into poultry
processor Baiada, we found that extensive use of labour
hire contractors by the company was leading to exploitation
of overseas factory workers. We welcomed Baiada's public
recognition of its moral and ethical responsibility to join with us
to stamp out this exploitation, and its agreement to implement
a range of sustainable changes to its business practices to
ensure future compliance. This includes stumping up for the
underpayment of visa holders by its contractors. That's right --
where the contractors don't pay, Baiada will. This is a big step
in the right direction.
As with Baiada, our ongoing inquiry into 7 Eleven will result in a
public report containing recommendations designed to achieve
real, sustainable change in the 7 Eleven network, to ensure that
the franchise is compliant into the future.
In the coming months, in partnership with the FCA, the FWO
will be focusing its attention on Australia's franchises. So --
watch this space.
In the meantime, you might want to consider what's happening
in your franchise network.
Our website, www.fairwork.gov.au, contains a range of
free tools and resources to help you and your franchisees
strengthen your workplace practices, including our Pay and
Conditions Tool (PACT), downloadable templates, online
learning centre and tailored information for both franchisors
and small businesses.
You might want to consider what more you can do to increase
your business's productivity and set your brand apart from
your competitors -- as a brand that respects and supports its
franchisees, employees and community, and in turn deserves
their respect and support.
Why not consider a compliance partnership with the FWO?
Compliance partnerships help franchisors to ensure that
their systems and processes are working effectively to build
a culture of compliance within their franchises; to build
positive relationships with their franchisees, employees and
the community; and to protect their brand. We have current
partnerships with a number of franchisors. You can find more
information at www.fairwork.gov.au/about us/our role/enforcing
the legislation/compliance partnerships.
I look forward to working with you.
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