Franchisees and fair work

30th October, 2017

After a string of scandals and revelations involving the underpaying of staff at national franchises, the government has moved to crack down.

Recently, important amendments to the Fair Work Act 2009 passed both Houses of Parliament. (The amendments won’t become law until the Bill receives Royal Assent.) While the changes apply to all businesses, they particularly affect those in franchising.

Disclaimer: This information is intended to be general in nature. For information that is customised to your business circumstances, please seek specialist advice.

Here’s a summary.

Changes to the Fair Work Act

The amendments take aim at things like ‘cash back’ arrangements where an employee is paid the lawful wage and then instructed to pay back a portion of the cash so everything appears well on the books but the worker is left short-changed.

It means that the Fair Work Ombudsman (FWO) has a suite of new powers, and penalties for contraventions of the Act are now harsher than ever before.

The main changes centre around the power the FWO has to investigate claims of dodgy dealing, and the penalties imposed for those found to be breaking the law.

Key changes for franchisor

The big one here is that contraventions deemed to be serious will now attract a penalty 10 times higher than before.

It will deemed to be serious if the FWO can demonstrate that a person knowingly contravened the Act as part of a “systemic pattern of conduct” aimed at contravening the Act.

That doesn’t mean ignorance is an excuse though.

The changes include a provision to make a franchisor liable if they knew or if they “ought to have known” about the dodgy dealing but failed to “take reasonable steps” to prevent it from happening.

Workers left out of pocket will also now be able to recover amounts they’re owed (as determined by the FWO) by the franchisor, rather than the franchisee.

The Act also broadens the definition of “franchisor”, and makes officers from the franchisor or holding company personally liable if the contraventions are heinous enough.

It means that franchisors now need to really be on top of what’s happening in their franchise.

Payslips are now crucial

There will stricter penalties for providing the FWO misleading information or inhibiting its investigation in any way.

This extends to payslips.

The penalties for providing false or misleading payslips will treble (yep, you read that right) while there’s a very important change in how the FWO will judge who’s responsible for producing payslips.

In some cases, if an employee alleges they’re not being paid correctly it will be up to the employer to disprove the allegation by producing the correct payslips.

READ: Wages compliance for franchises

In all, the changes mean that a franchisor needs to be across what’s happening with each of its franchisees.

Ignorance is well and truly not an excuse.

The penalties for franchisees doing the wrong thing have been beefed up and extended to include the franchisor even more – so there’s no just letting franchisees get up to their own devices and looking the other way.

With the right software in place, it’s possible to be across what’s happening in each and every franchise under your banner while letting you get on with the job.

More information

If you’re interested in the details, you can find the amendment here.

We’d also strongly recommend that you talk to a lawyer if you want further information on how it relates to your business.

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