Avoid Liability for Franchisee Breaches

FWO issues Franchisor guidelines on ‘Reasonable Steps’

The recent introduction of the Vulnerable Worker laws, in conjunction with the existing ‘accessorial liability’ provisions of the Fair Work Act 2009, means that franchisors, advisors (internal and external), management, payroll providers and of course, franchisees, face significant penalties for non-compliance, being aware of non-compliance, or for providing inaccurate advice.

These far-reaching laws mean that it is essential for franchisors to be proactive in managing their brand’s compliance – to take ‘reasonable steps‘ – to avoid becoming liable for breaches of employment laws by their franchisees.

The Fair Work Ombudsman (FWO) – the independent statutory body responsible for enforcing compliance with workplace laws and education – has recently published a resource for franchisors providing guidance on their responsibilities and practical steps that they can implement to comply with the ‘reasonable steps’ requirements. While the FWO make clear that it does not constitute as legal advice, it will nonetheless be highly influential in assessing liability in any prosecutions of franchisors under the new laws.

FWO’s 4 Steps to Compliance

The guide outlines four steps a franchisor can take to support their network and avoid liability for franchisee breaches –

1) Set expectations – From buddying-up prospective franchisees with high performing and compliant existing franchisees, to setting an impression in person, to having carefully drafted franchise agreements that include a legally enforceable requirement for compliance with employment obligations. Also, carefully examining the franchise financial model to ensure that a franchisee mustn’t work unrealistic hours in order to be profitable.

2) Educate and train – Hosting inductions for franchisees on workplace compliance matters, providing access to cost-effective advice and communicating and reinforcing your expectations of compliance on a regular basis.

3) Monitor compliance – Implementing an audit program to monitor compliance.

4) Take further action – Having a plan for when breaches occur and measured responses. This could range from educating in relation to minor errors, to considering legal action for deliberate non-compliance. It is the franchisor’s responsibility to ensure issues are handled promptly.

How we can help – FWO v. WorkShield service

After the franchise sector’s scrutiny by the FWO, the Media and politicians intensified (see a list of our related articles below), we developed an “All-You-Can-Eat” package of our new and existing services, to create ‘Workshield’.

WorkShield is tailored to educate, assist and audit franchisee compliance across franchise networks, partly as a result of ‘Vulnerable Worker’ laws coming into force.

We have included here a table of the FWO’s compliance checklist from the guide, along with a comparison of how our included WorkShield service offerings addresses each one.

Vulnerable Worker Laws

Our coverage of the Vulnerable Worker laws

We have been covering the developments of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 with great interest in the past two years.

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