Take steps to promote compliance: franchisors warned

Fair Work Ombudsman Natalie James.

The Fair Work Ombudsman has urged franchisors to take steps to avoid worker exploitation

With less than three weeks to go until new laws making some franchises and holding companies liable for underpayment of workers take effect, Natalie James spoke to the National Franchising Conference on the Gold Coast.

She says that the new laws set clear expectations that a franchise needs to consider how to prevent exploitation of workers in its network.

“Franchisors should be asking themselves, what steps do they need to take to ensure the businesses within their network are paying workers correctly,” Ms James said.

“By now, franchisors should be making it clear to its network that it expects franchisees to comply with workplace laws. Best practice would be to enshrine these expectations within franchising agreements.

“Franchisees should also have clear guidance on how to identify and correct mistakes when they occur.”

Ms James’ comments follow a roundtable discussion held on October 4, which was attended by senior members of the Fair Work Ombudsman and key stakeholders in the franchising industry.

This included large franchisors such as McDonald’s and 7-Eleven. A number of 7-Eleven franchisees have been penalised recently for under-paying employees.

Pharmacy franchises did not attend.

Ms James says the team is keen to work with franchisors and that more information will become available when the new laws come into effect later this month.

“We are currently looking at what support we can offer to assist the franchise sector to get ahead of the curve and we look forward to hearing from key employer groups and some major franchisors at the Roundtable about how we can best assist,” she said.

“While we welcome the provisions within the new Act, including the new penalties for serious contraventions which could see businesses penalised up to $630,000 and individuals up to $126,000 per contravention, it is our preference to prevent breaches from occurring in the first place.

“We recognise that investing proactively in compliance has a cost for a franchisor but it should be seen as an investment to protect your brand and reputation as well as the wellbeing of the workers who support and build the brand.”

However, Ms James warned franchisors against taking a narrow view of their responsibility to ensure compliance in their networks.

“In passing the new laws, the Parliament has reflected the community’s concerns about deliberate exploitation of vulnerable workers,” Ms James said.

“We will apply the new laws judiciously and fairly but we will not hesitate to use them to the fullest extent to protect vulnerable workers, I encourage franchisors to be proactive in taking steps to promote compliance in their networks.”

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