Recent industry disruption has led to an overhaul of current compliance regulations, culminating in the Fair Work Ombudsman’s (FWO) latest franchisor guide.
The FWO’s ‘Guide to Promoting Compliance in Your Franchise Network’ was recently released to assist franchisors comply with the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) (“Protecting Vulnerable Workers Bill”) that was passed on 15 September 2017.
The amendment sees the FWO with the renewed power to enforce action on liable franchisors.
Specifically, under the Protecting Vulnerable Workers Bill, franchisors can be found liable for contraventions of the Fair Work Act by franchisees within their franchise network.
According to the guide, a franchisor will not be liable for an underpayment where the franchisor has taken “reasonable steps” to prevent the contravention from occurring.
The FWO is also encouraging franchisors to develop a culture of compliance within their franchise network, through a series of steps.
The steps include;
- Encouraging prospective franchisees to spend time with existing franchisees to develop an understanding of their workplace obligations prior to joining the franchise network,
- Encouraging prospective franchisees to conduct accurate and extensive due diligence of the operating costs of the franchise, including labour costs,
- Ensuring that compliance with workplace law is a term of the franchise agreement and including information regarding monitoring activities such as audits, and highlighting the potential consequences for failure to comply,
- Requiring franchisees to acknowledge in writing that they will comply with workplace laws,
- Ensuring that the franchise business model is realistic, and providing disclosure documents that accurately take into account the cost of employing adequate numbers and staff.
Anna Ford, senior associate at Coleman Greig Lawyers said despite the tenuous nature of the sector, the implementation of the FWO guide marks a significant step in the right direction.
“The obligations now imposed on franchisors with respect to workplace law compliance are particularly onerous,” Ford said.
“This FWO guide is a significantly useful resource, as it provides specific examples of actual systems (i.e. practical ideas) which franchisors can immediately go about implementing to ensure that their entire network is better placed to comply with workplace laws.”
Last week saw the compliance laws in action, when a Fair Work Ombudsman report found compliance issues at 14 out of 15 audited Degani Bakery and Caf_ outlets.
Ford said in order to resolve issues such as those seen at Degani, franchisors need to come to a clear understanding of what the actual issues is, as well as their actual level of exposure.
“They (franchisors) will then need to lay focus both on immediate solutions that will allow them to address the issue at hand, as well as bigger picture issues, which should essentially involve developing a strategy which can be immediately implemented across the entire franchise network, in order to ensure that the issue doesn’t arise again in the future,” Ford said.
“Franchisors don’t want to be putting out fires as they move forward with their businesses, so another key piece of advice to keep in mind is to be pro-active, rather than reactive.”
The Degani findings mark a precedence that franchisors must take note of, with Ford suggesting the implementation of the FWO guide means that franchisors can no longer plead ignorance in regards to workplace compliance obligations.
“The FWO guide provides the practical tools necessary to ensure compliance, and the FWO will therefore expect that all within a franchise network, irrespective of their size and or time in operation, will utilise those tools to ensure compliance.”