By Steve Champion, Managing Director, ER Strategies.
We have in recent weeks seen two significant developments that demonstrate the FWO’s success in lifting the bar on both franchisor and managerial responsibilities in taking steps to ensure franchisee payroll compliance.
The Yogurberry Decision: National Audit & Payment Rectification
The Ombudsman Natalie James spoke recently at the Australian Labour Law Association National Conference about how her office is working with FWO chief counsel Janine Webster to actively enforce existing laws with different approaches.
“We are pushing the boundaries of the existing law. We think, in the public interest, and as the community expects us to."
“We look to leverage laws across the statute books, in the Fair Work Act and elsewhere, and other tools, such as appropriate use of the media, to ensure there are visible consequences for those who deliberately exploit the vulnerable.”
The FWO’s successful prosecution of Yogurberry in the Federal Court, resulted in the FWO securing not only financial penalties of $146,000 but also, for the first time, successfully gaining an order that a professional external audit of all Australian Yogurberry stores is to be conducted within the next two months, with rectification of any underpayments discovered.
Accessorial Liability : Casting the Net Wider and Deeper
In discussing the FWOs recent “Step Ahead Security Services” prosecution, Ms James flagged that the FWO’s new approach will be to seek orders requiring the accessory to personally repay the employees for lost wages. The former director of Step Ahead, Mr Owen Jennings, was required to pay the court-imposed penalties of $51,400, plus personally repay his employees $23,000 in lost wages.
ER Strategies has previously reported that last year over 90% of cases the FWO took to court included an accessory as a respondent, meaning many managers are also being personally prosecuted. Whilst initially focusing its attention on company Directors, the FWO is now actively expanding its scope to include any individuals who can influence the business settings.
Ms James said in relation to the Step Ahead case that the decision “opens the door for us to seek orders to make a range of accessories personally liable in the future – directors, contractors, franchisors and human resources managers included.”
Ms Webster advised the conference attendees that the FWO has initiated action against an HR Manager alleged to have created fictitious records for a Chinese restaurant franchise.
“We thought long and hard [about prosecuting the HR manager], but we thought that that definitely crossed the line”.
What is the Impact on Franchisors, Directors and Executives?
Some may say that the FWO’s reinterpretation of the responsibilities of employers, including franchisors and individual managers, is only bringing its prosecution activities into alignment with community expectations following a number of high profile cases in the franchise sector over the last 18 months.
The above recent decisions bring into question the wisdom of maintaining a franchise system which chooses to remain ‘ignorant’ of the human resource practices taking place within its franchise community.
Choosing not to ask questions about field workplace practices is becoming increasingly risky from legal, moral and brand protection perspectives. The FWO has also publicly supported organizations like McDonalds, Coles & Caltex for “doing the right thing”.
Individual managers should additionally be mindful of the FWO’s desire to assign personal accountability, and expect to be held to account for their actions.
How can ER Strategies help?
We have developed a complete portfolio of Brand Protection services for our franchisor clients. Elements of our all-inclusive services are:
…Free Trial Audit Offer
We are currently offering no-obligation, free trials of our payroll audit service, usually valued at $1500 each. The audit reviews data like that which would be checked by the FWO, and provides clear recommendations of changes required for your franchisee to become legally compliant with Australian employment laws.
Contact us at ER Strategies on 1300 55 66 37 to take advantage of our free audit offer or to discuss your service options, or visit us for more details at https://erstrategies.com.au/brandprotection .
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by QSR Media. The author was not remunerated for this article.
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