Getting it right in the franchisee workplace is a hot topic right now.
Franchisors need to consider the legal compliance regulations when managing their business, suggests Tasmin Trezise, Tanda co-founder.
The Fair Work Commissioner is resolved to stamp out underpayments to employees.
Natalie James, Fair Work Ombudsman, has said “Boardrooms are 'on notice' to pay attention to their labour supply chains.”
Make no mistake if a franchisor does not know what wages are being paid in this compliance environment the franchisor is risking brand equity.
What franchisors need to ensure
- That employers are paying employees under the correct award for their business.
- That the award rates are configured correctly with the correct rules, pay rates and distinction for Overtime, Allowances etc.
- That award rates are being calculated correctly (according to hours worked, employment type, age, type of hours)
- That you pay the correct penalty rates where necessary.
- That superannuation is paid correctly, for the correct hours worked (ordinary).
- That employees are listed correctly in the system in terms of staff details, employment type (staff ages/ birthday’s are correct, casual/ permanent, manager/ non-manager).
- That payslips are being sent out correctly.
- That time & attendance records are being stored securely and to date.
- That you are offering employees the correct benefits for their employment type (annual leave, sick pay, parental leave, community service leave, compassionate leave, long service leave).
- That you can account for allowances, and work expenses (travel allowance, laundry allowance etc).
- Are employees aware of and taking their correct meal allowances? Are they being paid for them/ compensated for them?
- When contracts are terminated, that the process for resignation/ redundancy are paid and recorded correctly.
- That employee contracts are legal and sound, and clearly outline the businesses expectations/ requirements.
- That staff have been categorised correctly according the Contractor or employee classification.
- Track employee deductions correctly and record them accurately.
Why compliance is such a big issue
Compliance is a serious issue for franchisors and franchisees because it affects the franchise in a number of areas. The main issue with compliance is the legal ramifications if it’s not met. However, if a franchise's non-compliance is publicised, it can have a negative impact on the franchise.
The franchise can;
- Lose the faith and trust of its employees, if they are being paid unfairly or incorrectly.
- Damage its brand reputation, by being perceived as a company that ‘rips off employees’, and doesn’t value relevant societal values.
- Suffer financially from the poor press, lost revenue and decrease in customer engagement with the brand
- Destabilise shareholders, donors, sponsors, executives and anyone who may be interested in the brand's financial future.
The franchise model typically works by decentralising responsibility, thus empowering franchisees to be somewhat autonomous in the management of their business. This decentralised responsibility can extend to labour supply chains, suppliers, contractors etc.
Fair Work will now be looking to the “Franchisor, principal or purchaser” as directly responsible for the actions of its franchisees. Fair Work Ombudsman Natalie James said in an article published in April, “The law can extend legal liability to individuals involved in the procurement and to companies further up the supply chain.”
This presents issues for franchisors, who might not be able to oversee or manage every single franchise site, to ensure they are meeting their legal requirements.
As can be seen by the rather extensive list above, there are multiple areas which franchisors need governance and oversight of, in order to meet their compliance requirements. Failing to meet just one of these requirements can have negative consequences where the regulator, the courts and the media are placing the onus on franchisors.
How best practice franchisors can get franchisees on board with a good system
The recent announcement from Fair Work has shifted responsibility for compliance to the franchisor, therefore it is their responsibility to ensure their franchisees are complying. Currently technological solutions can help.
Best practice franchisors should be encouraging their franchisees to get on board with compliant systems, because the benefits of using such software extend beyond the compliance value. Through technical systems, franchisors can empower their franchisees not only with software to help them manage their responsibilities, but also software that develops their understanding of their business.
Typically the labour force management software will load and lock an award or enterprise agreement and ‘push it down’ to franchisees.
Some franchise agreements may include the franchisor right to change the technology and other franchises will wait for an agreement to expire and then issue a fresh agreement with the right to change software.
After a number of very high profile Fair Work cases in franchising, resulting in massive fines, it’s now an easier ‘sell’ to those franchisees that have agreements where they don’t have to install franchisor suggested software.
From a franchisee and franchisor perspective, it makes sense that all in their network are also covered so as to protect the brand. It only takes one franchisee to potentially drag down a brand.
The best practice franchisors are looking for providers that are fully in the cloud and are known as ‘cloud natives’. Simply, they are fully functioning from the new cloud based technologies.
One of many benefits is that if an award or EA is changed, it changes in the whole network of franchisees at the same time. These cloud based technologies can provide enormous benefits to franchisors and franchisees alike with matters of governance, compliance, efficiency and oversight.
Put it this way. If your software provider is not fully in the cloud (not half in, as that's half out) and they are not absolutely strong on compliance to Fair Work, then it's time for a change.The stakes are now set very high.
In summary compliance is the new black. And if incorporated in best practice software it allows a franchisee to do a roster with all the rules preloaded and locked. It then becomes an efficiency tool around the lowest possible cost roster.