Franchisors to oversee employment practices of franchisees

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Franchisors to oversee employment practices of franchisees

A new private Bill introduced in the Parliament aims to ensure employees are paid correctly, whether or not they are Australian citizens.

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A new private Bill has been introduced in the Parliament entitled the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015.  

The aim of the Bill is to ensure employees are paid correctly, whether or not they are Australian citizens. 

The Bill amends the Fair Work Act 2009 by inserting new clauses which allows employees employed by a franchisee business to recover unpaid remuneration from the franchisor or head office entity directly. 

The Bill also promotes fairer contracts between franchisers and its franchisees. The harsh terms of some franchisee contracts, which leave little profit for franchisees, have been reported as a major reason for franchisees attempt to cut costs by reducing wages rates.

Reaction to 7-Eleven case


This Bill comes as the Fair Work Ombudsman continues to investigate and take action to recover unpaid wages and entitlements for employees of 7-Eleven stores, many of whom are foreign workers.

In the past six years, the Fair Work Ombudsman has recovered more than $600,000 in underpaid wages and entitlements for 182 workers at 7-Eleven outlets. 7-Eleven is currently the subject of a national Inquiry by the Fair Work Ombudsman into allegations of systemic underpayments and false record-keeping practices. 

The Explanatory Memorandum states: 
 
“In recent times there have been widespread incidents of workers being systematically underpaid within Australian franchises. The underpayment and exploitation of employees represents a serious breach of the rights of these workers. This amendment to the Fair Work Act 2009 would ensure that instead of leaving it to vulnerable workers to uphold the law through expensive legal action, head offices would take more responsibility for ensuring compliance with industrial laws in stores that carry their name.”

Next steps


Franchisors should continue to maintain oversight over the franchisee companies within their chains, to ensure legal minimum wages are paid to employees and the terms and conditions of employment meet the National Employment Standards (NES). 

The Bill has been read for the second time; and, if it is passed, franchisors can be held liable for underpayments by their franchisees.
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