“As well as attending the FCA Franchisor convention over the last few days, ER Strategies Director Steve Champion also had the honour of hosting a roundtable discussion around how to respond to the new laws, including how payroll audits can be a part of the reasonable steps franchisors need to take to avoid possible liability for franchisee underpayments. “
The very clear message from lawyers, specialist advisors such as ourselves and others including franchisors and the FCA, was that a considered, systematic response to the new laws is needed – or to put it another way, “plan, don’t panic”.
FWO Sets out 3 Key Compliance Principles
Natalie James, the Fair Work Ombudsman, in her keynote speech to the conference, set out 3 clear guiding principles that franchisors how must take to ensure compliance with the new laws, as well as avoiding potentially damaging media attention on a brand’s underpaid workers.
The 3 principles were –
1.Set clear expectations
This includes taking a consistent approach with your franchisees and enshrining this in your franchise agreement with your franchisees.
2.Support your franchisees to comply
Natalie James cautioned that it was important to check the capability of franchisees to comply with their employment obligations and not just assume they understood the information or resources that are provided to them. Also, some sectors are at a higher risk due to potentially vulnerable workers, such as in sectors where there are high numbers of foreign workers, perhaps on student or other working visas, the young or other disadvantaged.
3.Actively check what is happening in your network
The FWO suggested taking actions such as setting up confidential employee helplines and actively checking records. The FWO has also created a new ‘app’ called ‘Record My Hours’ to make it easier for employees to record their actual working hours where there was the potential that proper records were not being kept by their employer and / or they were not being paid their full working hours. The FWO app uses the phone’s location services and ‘geofencing’ technology to let employee users set their workplace location and automatically record when they start and finish work, based on their location.
This only makes the more important for employers, including both franchisors and franchisees, to make sure complete and proper records of working hours are kept, particularly given the new laws reverse the onus of proof to require employers who don’t meet record-keeping or pay slip obligations and can’t give a reasonable excuse will need to disprove allegations in wage claims made in a court.
Role of Payroll Compliance Audits
Clearly, there is no specific legislative requirement that makes payroll audits a mandatory part of a compliance program. However, as Natalie James indicated above, your business does need to know what is happening in your business network.
Although ER Strategies is already helping many franchisors to conduct a significant number of payroll audits of franchisees, we also recommend taking a systematic risk management approach to payroll compliance in a brand’s franchise network. Few franchisors will either need to, or can even afford to, conduct a full field audit of all or even a significant proportion of their franchisee outlets (unless of course they already know a significant compliance issue exists across their network).
We suggest considering starting with a self-audit by franchisees using simple online survey technologies, and answering a series of questions to help assess their general level of knowledge of employment compliance matters. Such a self-assessment, which can be done reasonably cheaply, will provide a franchisor with baseline data of areas of higher potential risk, which can subsequently be followed up with more detailed ‘desk-based’ or full field audits as required.
ER Strategies’ WorkShield Service – Your Brand’s Compliance Solution
ER Strategies has been helping many major and emerging franchised businesses for many years to meet their employment obligations, including covering the key compliance principles suggested by the FWO. We have bundled together a complete package of compliance options, including others demanded by our franchisor clients such as confidential employee helplines, telephone advice lines for both franchisors and franchisees, and payroll compliance audits, into our new highly cost-effective WorkShield service offering.
Special Offer – included Online Self-Audit for new WorkShield Clients
As a special introductory option for any new WorkShield clients, we will help you start your systematic approach to payroll compliance by assisting you to conduct a confidential Online Self-Assessment, including providing you with a report on the results which highlights key risk areas as well as identifying those franchisees who have gaps in their payroll compliance knowledge. The self-audit and report will be at no additional charge to your WorkShield membership.
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 F
- FWO issues Franchisor guidelines on ‘Reasonable Steps’ – 26/06/2018
- Update on Enforcement of the New Vulnerable Worker Laws – 16/05/2018
- All Employers Affected by New Vulnerable Worker Laws – 13/12/2017
- What happened to the Vulnerable Worker laws – 01/09/2017
- Vulnerable Workers laws – “oh no…they’re back!” – 07/08/2017
- Vulnerable Worker Laws Now One Step Closer – 20/05/2017
- Tips for Complying with the Vulnerable Worker Laws – 11/04/17
- Joint Employment for the Franchise sector? – 14/03/2017
- New Vulnerable Workers Laws introduced into Federal Parliament – 02/03/2017
- New Laws Protecting Vulnerable Workers Now Imminent – 13/02/2017