08/08/2016Franchising, HR Infrastructure, Employee Issues

We recently asked three questions about payroll compliance to over 1,500 senior personnel from Australian franchises. Here is what they said.

We were keen to find out more about franchisors’ perceptions of the depth of the problem of payroll non-compliance in Australia, as well as some of the wider implications for the sector, and how compliance could be improved at franchisee and franchisor levels.

This has been prompted by the well-publicised 7-Eleven case, which came to light in August 2015. Since then, there has been a Senate inquiry into visa abuse and payroll compliance issues, the Fair Work Ombudsman has issued a statement that compliance is a “moral if not legal responsibility”, and just prior to the recent July federal election, both major parties released policies promising strong new laws to protect exploited workers in the sector.

All this attention for franchisors has resulted in the spotlight falling increasingly on them to demonstrate that they are taking the matter seriously.

We asked these 3 questions -

  1. Do you think payroll compliance is a threat to the franchise sector?
  2. What are some of the long term implications of payroll non-compliance?
  3. What should franchisors be doing to improve compliance?

We have now compiled an Insight Report based on the answers provided.

Key Report Findings

It was interesting to find that a staggering 83.3% of people responding were concerned that payroll compliance was indeed a threat to franchising, with almost half (45%) saying it causes long term brand damage, and that auditing franchisees is the best way to solve the problem (48%).

There were some less obvious forecast consequences of brand damage, which included -

“Aside from the risk of underpayments, and employees potentially being taken advantage of, as well as the perception in the media/wider community, the other implication will be a negative impact on recruitment strategies."

Given the competitive market for franchisors to also be able to attract good quality franchisees, bad brand PR could also hurt franchisee recruitment strategies, particularly if it is taken to indicate that franchisees are underpaying due to profitability perceptions.

To read the full report, click here in order to download it.

ER Strategies comment - we would love to hear your feedback on the solutions people shared, so feel free to add your comments in the Discussion below. Given the large survey response and high interest generated by the planned legislation, we are planning to organise Roundtable meetings to discuss the findings and proposed solutions. If you are interested in staying in the loop in relation to discussing these results and what action you will be implementing, please drop an email to our Director, Steve Champion and we will ensure you are kept informed.


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