Home' The Franchise Review : March 2017 Contents THE FRANCHISE REVIEW
substantial penalties against the master franchisor for its
involvement in the exploitative practices of one of its associated
entities. The reasons given for extending the accessorial liability
to include the master franchisor was that they were said to have
had ‘knowledge of, and participated in, establishing rates of
pay, making payment of wages, determining hours of work and
dealing with employment-related matters’. It was also intended
to have a deterrent effect.
It is also important to remember that one of the Turnbull
Government’s election promises was to commit to increase
penalties for serious contraventions of workplace laws, expand
existing laws by capturing franchisors and parent companies
who fail to deal with exploitation by their franchisees, and
strengthen the FWO’s powers so that it can compel individuals
to produce information and answer questions.
If those commitments find their way into law (and it is expected
that they will), and assuming that the FWO continues down
its path of joining accessories involved in contraventions to its
proceedings, then individuals who play a role in setting and
overseeing employee terms and conditions within businesses
should heed James’s warning: ‘ ...there has never been a
better time to ensure [that] you are giving holistic and
sound advice about compliance with workplace laws’.
The launch of the Anonymous Report tool
To assist the FWO in its endeavours to ensure that employers
cannot outsource their non-compliance or hide from their
obligations, in April 2016, the FWO also launched its online
Anonymous Report tool. This portal enables members of the
community, whether they be workers, consumers, concerned
citizens, businesses or competitor businesses, to alert them of
any potential non-compliance on an anonymous basis.
In the FWO’s annual 2015–2016 report, it was confirmed that
in the first three months, the FWO received 1713 anonymous
complaints. Of those complaints, 77 per cent raised concerns
about rates of pay – predominantly underpayment of hourly
rates, non-payment of wages and penalty rates.
The data is then used to identify trends and patterns, which,
in turn, generates leads for education, compliance and
presumably targeted campaigns.
So, how do individuals directly working in a franchise
business minimise the risk to them personally?
The FWO is sending a clear signal to all levels of business (and
in particular, employees) that just because they are not the
director or party to a franchise arrangement, does not mean
they are immune from prosecution.
It has therefore never been more important for legal counsel,
HR managers, advisors and franchisees to satisfy themselves
that their business is meeting its minimum legal obligations to
employees. This may mean conducting semi-regular audits of
pay, conditions and record-keeping obligations both of your
business and of any third-party contractor you may engage.
Such audits are important, particularly in industries that engage
vulnerable and low-paid employees, where the difference
between compliance and non-compliance may be as innocent
as a delay in passing on an increase to the minimum wage.
If an audit identifies underpayments or other irregularities,
then of course the next step for those individuals would be to
immediately take steps to remedy that situation, and ensure
that the business is compliant in the future.
If you are a franchisor, or other advisor or service provider,
your situation is somewhat more complicated and may depend
on what knowledge you have about the business in question.
What is clear, however, is that franchisors and other service
providers cannot turn a blind eye if they become aware of a
breach in their network or their clients’ business.
Whatever your specific situation, if you would like any advice or general
assistance (or even assistance in setting up an appropriate internal
audit process), please contact Lisa Anaf, Partner – Workplace Relations,
Employment and Safety, for further assistance on 03 9605 0857.
The FWO is sending a clear signal to all
levels of business (and in particular,
employees) that just because they are
not the director or party to a franchise
arrangement, does not mean they are
immune from prosecution
1. An adviser’s responsibility: the Fair Work Ombudsman’s approach to accessorial liability
- Address to the Australian Human Resources Institute (AHRI) Employee Relations / Industrial
Relations Network NSW by Natalie James, Fair Work Ombudsman, Wednesday, 27 July 2016.
Links Archive December 2016 June 2017 Navigation Previous Page Next Page