The Federal Court, in rejecting a challenge from Bakers Delight, has again highlighted the need for brand partners and franchisors to effectively manage the compliance of their partners, or face responsibility for any underpayments made by those partners.
In this particular case three Bakers Delight outlets which were operated by a now liquidated franchisee business, underpaid workers by $1.2M. During the initial case the Fair Work Ombudsman held Bakers Delight head office responsible for half of the underpayment, ruling that as the lead partner in the relationship they had a responsibility to take ‘active’ steps to ensure franchisee or operating partner compliance.
Bakers Delight challenged the ruling on the basis that the franchisee was a separate business and Bakers Delight could not be held responsible for the actions of the partner business.
Learnings for all Businesses
“It is common in business for specialisation and delineation to be a strategic choice to allow focus at the different levels of operations”, explains ACAPMAs Elisha Radwanowski.
“This specialisation and delineation often manifests as outsourcing, franchising, dealers/partner, subcontracting and other ‘structured’ business arrangements that allow each layer to ‘focus’ on the area they are good at. Like the head office or brand partner focusing on marketing, branding and high level customer engagement and the dealer partner or franchisee focusing on delivering on the ground, managing staffing and stock”, continued Elisha.
“This case, and the ever growing case law and legislation, again reminds both the brand partners and the dealer partners that while there is a clear difference in the businesses and their operations, when it comes to the pay and conditions for employees the courts will hold all layers and all partners responsible. More than this, typically in addition to an operational partner and a head brand partner being drawn into a case like this, it is common for all the other operational partners to also be swept up in the investigation”, adds Elisa.
“This case is another wake up call to all ‘structured’ business operations at all levels; it is time to check your compliance and the compliance of the people and businesses that carry your brand. Because non-compliance will tar everyone with the same brush, and everyone will be held responsible for underpayments”.
ACAPMA Employment Compliance Health Check for Fuel Retail and Transport
The Fair Work Ombudsman has made it clear that all employers, of all sizes, should be utilising structured audit programs to address and avoid underpayments. ACAPMA strongly encourages all members to take this call to heart and ensure that they are having a professional, independent and industry specific audit of compliance done regularly.
“ACAPMA offers members the ability to access fuel transport and fuel retail specific Assisted Compliance Audits, where ACAPMAs in house employment professionals review systems and outputs. The ACAPMA Assisted Compliance Audits provide members with more than just a list of non-compliances, these audits provide members with ‘assistance’ in the form of templates, resources and guidance, to address the non-compliances and to ‘fix’ the systems to avoid future non-compliances”, explains Elisha.
For more on the ACAPMA Assisted Compliance Audits see;
Here to help
ACAPMA members are reminded that they can access the advice support resources and representation of the ACAPMA Employment Professionals on this issue, or indeed any other employment issue, 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 and you should seek further advice on your situation by contacting the ACAPMA Employment Professionals via employment@acapma.co.au its free for members. Click here to apply for ACAPMA Membership.
Elisha Radwanowski BCom(HRM&IR)
ACAPMA
