New Bill Compels Oversight by Franchisors

The Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 was introduced to the House of Representatives on 1 March 2017 to better protect vulnerable workers. This Bill has come to fruition after reports of Franchisees and Subsidiaries underpaying workers while Franchisors and Holding Companies have turned a blind eye to this misconduct.

As a result, the Bill places additional responsibilities on Franchisors to ensure their Franchisees are complying with relevant obligations and civil liabilities in relation to the treatment of employees.

A breach of the proposed amendments by a Franchisor will occur if the following conditions are met:

  • The Franchisor has a significant degree of influence or control over the Franchisee’s affairs; and
  • The Franchisee contravenes a civil remedy provision in the Fair Work Act 2007; and
  • The contravention by the Franchisee occurs in its capacity as a Franchisee; and
  • The responsible Franchisor knew or could reasonably be expected to have known the contravention would occur.

Civil remedy provisions which Franchisees must not contravene include those relating to minimum wage orders, award compliance, equal remuneration orders, methods of payment, guarantees of annual earnings, keeping employee records, and so on.

If this Bill is passed, Franchisors will have to take reasonable steps to prevent such contraventions by their Franchisees to remain compliant with the law.

Responsible Franchisors who should have known about their Franchisee’s contraventions could face a penalty of $10,800.00.

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Level 1, 109 Pitt Street NSW 2000 Australia
Level 1, 109 Pitt Street NSW 2000 Australia
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