It is incumbent on businesses to ensure that they are complying with employment laws, but also that those businesses they partner with in a franchise or similar arrangement are also complying.  The Protecting Venerable Workers changes have enshrined into law penalties and responsibilities for business that do not meet this requirement, leading to a situation where franchisors or controlling partners may be held responsible not only for the underpayments of their franchisees, but also face breach penalties.  Franchisors and controlling partners are required to demonstrate that they have undertaken Reasonable Measures to ensure that their franchisees are complying.  While Reasonable Measures have been defined within the legislation there has been calls for clarity and a practical working framework for what is ‘reasonable’ to be explained.  In response the Fair Work Ombudsman has released a practical guideline to assist businesses at all levels in understanding what they should be doing to ensure they and their partners are operating compliantly.

The Fair Work Ombudsman’s Guide to promoting workplace compliant in your franchise network is a practical case study based guideline that outlines the expectations of the regulator.

In launching the Guide, Fair Work Ombudsman Ms Natalie James spoke to the face that what is reasonable will depend on the operators involved.  “A franchisor sets the tone for its network and needs to consider the capability and sophistication of its franchisees in managing its risks and deciding how to go about providing franchisee support,” Ms James said.

“The term ‘reasonable’ by its very nature requires that the particular business and its circumstances determine the expectations and the sorts of actions required, and this is where the guide is a great resource.”

“Workplace compliance is a compulsory requirement for any business,” Ms James said.  The Guide outlines useful strategies that head franchisors can implement to promote compliance with workplace laws in their networks.

“The Guide will be useful for franchisors of all shapes and sizes. It sets out four practical steps franchisors should be taking, and recommends a variety of strategies to help franchisors manage their workplace compliance risks now and into the future.”  The Guide clearly outlines that it is incumbent on network operators to; set compliance expectations within the network, educate and train partners as to the requirements of compliance, actively monitor compliance levels and to take appropriate action where compliance issues persist.

“The law states a franchise will not be liable for underpayments where it can show it has taken ‘reasonable steps’ to prevent this from occurring.

“Brands that have invested in compliance have found this to be a small price to pay in comparison with negative brand coverage, market cap deterioration and a whole host of legal and accounting problems with franchisees down the track,” Ms James said.

“I have said again and again that certain markets are higher risk than others and have identified the characteristics that feature repetitively in systemic non-compliance: low skill work, labour intensive sectors, high levels of vulnerable workers and tight profit margins.

At a recent fuel industry event the Fair Work Ombudsman presented an overview of the regulators activities and findings and outlined clearly that all operators in the fuel industry should be actively engaged in programs to understand the requirements of compliance and to be able to clearly demonstrate compliance to regulators.  The presentation noted the increased penalties for all operators, not just franchisors, in the areas of record keeping breaches and articulated that any operators found to be deliberately misleading the regulator would be pursued to the full extent of the law.

At the same presentation the industry was applauded for the development and increasing uptake of proactive compliance auditing, including the ACAPMA Assisted Compliance Audit, which works with operators to identify compliance gaps and provides resources and assistance to address those gaps to enable all operators to be able to demonstrate compliance.  For more information on the ACAPMA Assisted Compliance Audits please email employment@acapma.com.au

The Guide is a useful resource for all network operators, small and large, and all operators are on notice to ensure that they understand the requirements and standards it sets so that they can demonstrate that they are indeed undertaking all reasonable measures to ensure that their partners are compliant.  Failure to do so puts the business at risk of more than just back payments and fines, it puts the business at risk of reputational damage.  For a copy of the Guide see:  https://www.fairwork.gov.au/about-us/news-and-media-releases/2018-media-releases/june-2018/20180614-franchising-guides