When an audit of two locations of a sandwich franchise identified record keeping and underpayment issues a broad audit program was launched.  The broader audit program investigated all 39 locations across four States and uncovered $182,596 in underpayments of 214 workers along with extensive record keeping breaches.  This latest case of underpayments highlights the need to actively review compliance status in the business, and to seek advice and support from beyond the internal structures of franchisor/franchisee models.

The franchise wide audit by Fair Work was triggered by a single pro active Fair Work audit on a single site in Geelong.  After finding discrepancies in weekend rates and recordkeeping issues Fair Work launched a broader investigation of all of the franchise sites.  The results have been disappointing

“[the franchise] unfortunately is another franchise in the fast food, restaurant and cafes sector where we have found with rates of non-compliance spreading across multiple states.  Employers can’t pick and choose which wage laws they follow and those doing the wrong thing are being found out” explains acting Fair Work Ombudsman Kristen Hannah.

“We expect all employers in franchise networks to meet their obligations, and there has never been more free tools and resources available to help them get it right.  Any workers with ways concerns should also contact us” added Ms Hannah.

Learnings for Businesses

“Franchise networks are a wonderful structure to impart systems, product and retailing knowledge quickly to business operators who may not necessarily have those skills initially.  The benefits of a franchise systems; close support from head office, detailed structures, information and experience sharing with franchisee colleagues, can lead to improved success for the franchisees, but it can also create an echo chamber where small errors in approach can be magnified and normalised” explains ACAPMAs Elisha Radwanowski.

“Business operators need to be particularly cautious when it comes to items such as employment compliance.  Employment compliance is notoriously difficult to navigate, with the requirements, standards and rates changing continually based on legislation, award and case law changes.  Taking the advice of colleagues or other operators on employment compliance can lead to multiplication of minor errors” adds Elisha.

“When it comes to the constantly moving target that is employment compliance professional, independent guidance is a must to ensure understanding of the requirements and compliance of operations and systems.  The Fair Work Ombudsman website has some great general resources for businesses to help them understand and comply with the requirements.  Many industry associations also provide professional, industry focused advice, support and guidance that can assist businesses in understanding the specific industry requirements” continued Elisha.

“ACAPMA has over 45 years experience providing operators in the fuel wholesale, transport and retail industries with advice, support, templates, guidance and representation in employment compliance matters, and has leveraged this experience, and the professional qualifications of its Employment Department staff to develop proactive health check audits that do more than identify issues, they actively work with sites to correct and close any identified gaps” says Elisha.

“It is vital for businesses to understand what is required, but also how to correct past issues and ensure systems are corrected to ensure future compliance.  Regular health checks, that come from outside of the businesses usual circle of franchisor/accountant/advisor is vital for finding issues early and allowing for minor corrections before there are major issues” adds Elisha.

“This case highlights clearly that the Fair Work Ombudsman is actively auditing sites, and where they are finding issues in one location they are turning their eyes to all of the locations flying the same colours.  Franchise, CA, dealer and brand networks should take note of this impact of such an approach on them” concludes Elisha.

Here to Help

ACAPMA Employment Department professionals are available to assist members with this and other employment matters via employment@acapma.com.au

HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice, Members are reminded that they can seek further advice on their situation by  emailing employment@acapma.com.au  its free for members. ACAPMA membership is affordable at only $810 per year for a single site and valuable with sites gaining HR advice support and representation as well as a raft of other benefits and discounts. Click  here to learn more about ACAPMA membership.

Elisha Radwanowski BCom (HRM & IR)