Australia brews better franchisor workplace compliance

Franchisors will need to carefully examine their role in the compliance activities of their Australian franchisees as a result of legislation passed in the Australian parliament on 5 September 2017.

The Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 has important operational implications for franchisors. Some of the changes are specifically directed at franchisors and will be a focus of the Fair Work Ombudsman’s compliance efforts.

The new legislation is designed to deter franchisors (including sub-franchisors) with “significant influence or control” over their networks from turning a blind eye when their franchisees breach Australian workplace laws. There are some key changes to the Fair Work Act 2009 and franchisors may need to consider any action they may take to address this new regulatory risk.

The changes commence at the beginning of November 2017, but courts may have regard to conduct that occurred or circumstances existing in the six weeks leading up to commencement.

The new legislation was developed in response to widespread media coverage regarding the exploitation of vulnerable workers by some franchisees in several large franchise systems. The issue has been examined in a number of reports, including in an inquiry by the Fair Work Ombudsman, which revealed systematic underpayment of migrant workers and the practice of some franchisees to require employees to repay wages in cash.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by emailing: Danian Zhang at danian.zhang@bakermckenzie.com, or for general enquiries contact Anand Ramaswamy at anand.ramaswamy@bakermckenzie.com