Everyone remembers the 2015 scandal involving 7-Eleven and the underpayment of its workers – an apparently systemic issue of wage fraud and (apparently) wilful ignorance by the franchisor.

The public outrage ultimately led to a re-write to parts of the Fair Work Act (Division 4A). If you’re a Franchisor, you can now be held personally liable, if your franchisees breach their workplace law obligations (in some cases, even if you’re not aware).

A key exception to not being found personally liable is if you have taken reasonable steps to prevent the contravention. What constitutes reasonable steps will depend upon the circumstances at the time.

Below are some of the types of things you can do to help demonstrate that you have taken reasonable steps:

  1. Review your franchise agreements to ensure that you have the powers you need to audit and enforce workplace compliance of your franchisees, and if not, update the documents as necessary;
  2. Notify your franchisees that you take workplace compliance seriously, and formally incorporate this into both training franchisees and in your franchisee on-boarding and renewal process;
  3. Conduct your own due diligence regarding the types of awards and minimum employment entitlements which would apply to a typical employee of a franchisee within your network. Share this with your franchisees, and proactively encourage franchisees to educate themselves and seek advice when engaging employees;
  4. Encouraging dialogue with employees of franchisees to potentially avoiding contraventions at an early stage and encourage employees to report any concerns regarding potential contraventions; and
  5. If a contravention occurs or is suspected, act quickly and don’t hesitate to seek legal advice.

Do you have concerns about whether your agreements comply with the updates to the Fair Work Act? We, together with our Collective members, can help you with any of the above. Get in touch with the team at businessDEPOT Legal to discuss your franchise agreements.

General Advice Disclaimer

Information provided on this website is general in nature and does not constitute financial or legal advice. Every effort has been made to ensure that the information provided is accurate, but information may become outdated as legislation and new government announcements are made. Individuals must not rely on this information to make a financial, investment or legal decision as it does not take into account their personal circumstance. Before making any decision, we recommend you consult a licensed adviser or legal practitioner to take into account your particular objectives, circumstances, and individual needs.