In 2017 the Fair Work Amendment Act was introduced by government as it moved to protect the exploitation and underpayment of vulnerable workers in Australia. When it came to light that prominent companies such as 7 Eleven, Domino’s and Caltex were engaging in dubious workplace practices, changes were introduced to hold those at the top of the supply chain accountable.
What does it mean for franchisors? They now have much greater responsibility for failing to act when a franchisee is found to be violating the Fair Work Act – and the penalties are stiff.
So what can franchisors do to minimise their legal and reputational risks?
Franchisors need to help their franchisees understand and meet their responsibilities under workplace laws. Franchisors have a responsibility to know what’s going on in the workplace of their franchisees, and need to take reasonable steps to avoid Fair Work breaches.
There are a number of steps to take that will set your franchise up with compliant operations and a fair work environment.
- Your franchise agreement should clearly state that franchisees are expected to comply with workplace law. Franchisees need to understand that this is a requirement.
- Make sure the franchisee’s business model takes into account the cost of legally employing sufficient staff.
- For clear and consistent employment conditions, negotiate a registered agreement for your franchise.
- Arm your franchisee with the tools and processes to make compliance easy; make sure they are educated and have access to the Fair Work handbook.
- Keep your franchisees regularly updated about their workplace obligations by making assistance available and providing training.
- Educate franchisees on resolving workplace disputes.
- Direct franchisees to the Fair Work online pay tools, templates and learning centre.
- Take an active role in ensuring compliance; regular monitoring will make sure issues are dealt with before they become a problem.
- Conduct regular audits of play slips and records and require franchisees to ‘self-audit’.
- Allow employees to come directly to the franchisor if they feel their needs are not being met.
- If Fair Work is conducting an audit, require franchisees to notify you and make it clear that there’s an expectation that franchisees cooperate with Fair Work.
While the Fair Work reforms will impact most franchisors, there’s no need to feel overwhelmed. There’s always someone to help. It’s important to seek appropriate legal advice that relates to your particular system, as there are a number of options available to effectively and positively manage risk.
Bruce McFarlane is the managing director of BlueRock Partners and a specialist in franchise law. He loves nothing more than building opportunities for the BlueRock community…and a long ride with the Dendy Riders.