When you buy a franchise you tap into many aspects of the franchisor’s business.

But the relationship between franchisor and franchisee is one akin to an independent contractor relationship, whereby each party remains principally autonomous and responsible for the legal ramifications of their own conduct.

During 2015 and 2016, a number of reforms have been proposed at a parliamentary level, including:

• Greens MP Adam Bandt introducing the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill in October 2015, attempting to give employees a legal right to recover wages directly from the franchisor in circumstances where an employee has been underpaid by its franchisee employer; and
• the Coalition's pledge to, if re-elected, implement its 'Policy to Protect Vulnerable Workers' which would introduce new offence provisions in the Fair Work Act holding franchisors liable for breaches of the Act by its franchisees, if the franchisor should have been 'reasonably aware' of the franchisee's contraventions.

As the law currently stands, franchisors are not legally required to assist franchisees to comply with their workplace obligations and, as a consequence, franchisees are not able to rely upon their franchisor for assistance with implementing employment policies in their workplace.

Some franchisors may choose to offer assistance and advice to their network, however, franchisees, as independent business owners, are ultimately responsible for compliance with Australian workplace laws and will be liable for the legal consequences of any failures to comply.

Franchisees and employment policies

So, franchisees should ensure they understand their legal obligations and decide whether employment policies will be of value to their business. If so, well drafted employment policies can benefit franchisees by:

1. providing a platform for which expectations of employee behaviour can be identified and managed (in effect, giving your business grounds to performance manage and/or terminate employees); and
2. reducing the risk of non-compliance with state based occupational health and safety laws (provided, for example, a workplace health and safety policy is distributed and enforced against staff).

An effective employee handbook should cover a wide array of situations that may arise in the workplace, including:

• workplace health and safety
• bullying and harassment
• use of company property
• use of internet and social media
• smoking
• work attire

The recent case of Romero v Farstad Shipping (Indian Pacific) Pty Ltd demonstrates that employers need to think carefully about the wording of their policies. In this instance, the Court awarded damages against a company that failed to follow the appropriate investigative procedure outlined in its employee policies which were held to be contractual in nature.

As a consequence, it is suggested that franchisees take on board the Court's findings and consider the following suggestions if introducing employee policies:

1. the policy should contain moderate language and not be presented as a formal contract (in addition, an employment contract should state that the policies do not form part of the worker’s employment contract);
2. the policy should, for the most part, contain expectations of employee behaviour. There is no need to specify any procedure unless this ensures compliance with a particular law (for example, a grievance procedure to address complaints about workplace bullying may be appropriate to mitigate a company's OHS risk, however, rigid procedures that mandate the company's adherence to, for example, a certain disciplinary procedure in circumstances of employee misconduct should be avoided); and
3. Finally, franchisees should be aware that employee policies are only effective to the extent that they are reminded, distributed and enforced against staff.

Seek legal advice about workplace obligations as a franchisee

For the time being, franchisees are left to their own devices in ensuring compliance with Australian workplace laws and instruments that apply to their industry. This can, in many ways, be effectively managed by seeking appropriate legal advice as to Australian workplace laws and the obligations imposed on employers and implementing appropriately worded employment policies.