FWO warns franchising sector over complacency

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With less than three weeks until new laws making some franchises and holding companies liable for underpayment of workers take effect, the Fair Work Ombudsman has cautioned the industry against being complacent.

Speaking at the National Franchise Convention on the Gold Coast, Fair Work Ombudsman Natalie James said the new laws set clear expectations that a franchise needed to consider how to prevent exploitation of workers in its network.

“Franchisors should be asking themselves what steps they need to take to ensure the businesses within their network are paying workers correctly,” she said.

“By now, a franchisor should be making it clear to its network that it expects franchisees to comply with workplace laws. Best practice would be to enshrine these expectations within franchising agreements.

“Franchisees should also have clear guidance on how to identify and correct mistakes when they occur.”

Ms James’ comments follow a roundtable discussion held last week attended by senior members of the FWO and key stakeholders in the franchising industry, including representatives of industry organisations and some of the nation’s largest franchisors, such as McDonald’s and 7-Eleven.

“We’re keen to work with franchisors, their advocates and advisers to understand their needs, and more information will be published in the Help for franchises section at www.fairwork.gov.au when the changes take effect later this month,” she said.

“We’re currently looking at what support we can offer to assist the franchise sector to get ahead of the curve, and we look forward to hearing from key employer groups and some major franchisors at the roundtable about how we can best assist.

“While we welcome the provisions within the new act, including the new penalties for serious contraventions which could see businesses penalised up to $630,000 and individuals up to $126,000 per contravention, it’s our preference to prevent breaches from occurring in the first place.

“We recognise that investing proactively in compliance has a cost for a franchisor, but it should be seen as an investment to protect your brand and reputation as well as the wellbeing of the workers who support and build the brand.”

However, Ms James warned franchisors against taking a narrow view of their responsibility to ensure compliance in their networks.

“In passing the new laws, the parliament has reflected the community’s concerns about deliberate exploitation of vulnerable workers,” she said.

“We will apply the new laws judiciously and fairly, but we won’t hesitate to use them to the fullest extent to protect vulnerable workers. I encourage franchisors to be proactive in taking steps to promote compliance in their networks.”

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