Protecting Vulnerable Workers Bill 2017: How Will it Affect Franchisors?
With new laws set to hold the Franchisor responsible for Franchisee workplace violations, we take a look at how the new bill differs from the existing protections and what Franchisors can do to cover themselves from a costly penalty going forward.
In light of last year’s underpayment saga that saw many high profile Franchises failing to pay their staff correctly, the Federal Government made a commitment to amend the Fair Work Act 2009 (Cth) (Act) in a bid to put the onus on Franchisors for contraventions of the Act committed by Franchisees; hopefully strengthening Australia’s existing law framework.
Franchisors must take note that they can no longer consider themselves protected by the Franchise Model and Franchisees need to understand that failing to meet workplace obligations can put the entire Franchise brand at risk. The new laws intend to hold the Franchisor responsible for their Franchisees or Subsidiaries workplace violations if:
- • The Franchisor had control or influence over the Franchisee
- • The Franchisor was aware of any underpayment or likelihood of underpayment by knowing or participating in the decision process regarding wages
- • The Franchisor failed to take reasonable action to address potential violations in the workplace
Under the proposed revisions, the Fair Work Ombudsman (FWO) will have more enforcement powers and can issue a notice to both individuals and companies for an investigation at any time. It would be a civil offense to deliberately make the FWO’s work more difficult and there will also be a prohibition on intentionally providing false or misleading information, especially as interviews conducted may be under oath or affirmation.
So what can Franchisors do to minimize the risks?
To start with, Franchisors can help Franchisees by implementing some of the following practices (regardless of what the final outcome of the Bill turns out to be):
- • Create policies and procedures outlining legal compliance as standard, expected from all Franchises; and any employees working under the brand;
- • Develop internal tools or services to support and audit all processes;
- • Start compliance training from day one so all Franchisees are clear on expectations;
- • Provide on-going support to Franchisees;
- • Continually monitor and audit compliance across the business.
As you can see, the proposed Protecting Vulnerable Workers Bill 2017 considerably broadens the conditions in which Franchisors can be held responsible for employment law breaches by their Franchisees. Even though the Bill is not yet set in stone, Franchisors should still take active steps towards implementing the above audit and review procedures as good workplace practice ahead of any further scrutiny. The penalty costs for Franchisors being found in breach of the new laws are substantial (not to mention the brand name being publicly dragged through the mud), therefore it’s much better to be safe than sorry.
Are you worried that your business or franchise is exposed? Contact Human Resource Services Pty Ltd now to arrange a comprehensive HR Management System Audit and understand your risks and how to manage them. Call (07) 5530 1571 or visit our website for more information www.humanresourceservices.com.au
