With Parliament currently debating changes to the Fair Work Act, franchise businesses are facing the prospect of greater compliance risk, according to a workplace relations firm.
Discussing the passage of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, Harry Hilliar, senior employment relations adviser at Employsure, says franchisors will be particularly hard hit by a greater compliance burden.
“The proposed changes are of huge significance to franchisors. The amendments are intended to target larger corporations that see the current penalty of $54,000 as an acceptable cost of doing business, but there is no distinction in the bill between a large and small employer, taking the risks for all franchises in relation to contraventions of workplace laws from bad to worse,” Mr Hilliar says.
His comments suggest that the relationship between franchisor and franchisee, which has been strained in high-profile cases of employee underpayment such as that of 7-Eleven, may face even greater strains once the bill is passed.
“The franchise sector is being singled out and put on notice, with franchisors required to take greater responsibility for the employment practices of their franchisees,” he says.
“We work with many franchises – the extra burden placed with this increase in liability emphasises the importance of reporting and compliance to every franchisor.”
Mr Hilliar adds: “While the bill proposes that a franchisor must show that it has taken reasonable steps to prevent contraventions by its franchisees, it does not outline the fine print as to what is considered reasonable. In short, ensuring compliance across the employment relations practices of its franchisees will become an even more substantial risk area and liability for franchisors.”
The International Franchise Association took its criticism of the bill further, saying it will “cripple the Australian franchise industry, and lead to fewer jobs and slower economic growth”.
“Australia is one of the world’s most franchised economies, and the proposed bill is threatening the franchising model as we know it,” the association’s president and CEO, Robert Cresanti said.
“Franchise companies, entrepreneurs and employees alike are all in danger under the proposed legislation. Before voting on the Fair Work Amendment Bill, Australian lawmakers must recognise the real economic and employment consequences this bill will have.”