What should you do to ensure compliance of the Protecting Vulnerable Workers Act?

Here the Fair Work Ombudsman sets out what’s required of franchisors…

Although the Protecting Vulnerable Workers Act does not displace franchisee responsibilities for compliance with workplace laws, it does extend franchisor liability by holding certain franchisors and holding companies responsible for underpayments to workers by businesses within their network.

This can occur, for example, where a franchisor has a significant degree of influence or control over the franchisee’s affairs and the franchisor (or one of its officers) knew, or could reasonably be expected to have known, that underpayment of wages by a franchisee would occur or was likely to occur.

This responsibility can be discharged by the franchisor taking reasonable steps to prevent the underpayment of wages arising within their network.

It’s been nearly six months since the new laws came into force, so here’s a refresher on what franchisors should consider doing to help protect workers and ensure compliance within their networks:

1. Set clear expectations for franchisees

The first step you should take is to make it clear to your franchisees that you expect them to comply with workplace laws. Best practice would be to state this in your franchise agreement and to set out consequences if franchisees fail to comply.

If this isn’t possible, or cannot be achieved in the short term, then you need to communicate your expectations to them in another manner that is clear and unambiguous. We recommend you do this right away.

2. Support franchisee compliance

The second step you should take is to support your franchisees to comply by providing information and support suitable for both their capability and that of the workforce.

Vulnerable workers, such as young workers or migrant workers, are less likely to be aware of or act on their rights – a prudent business would provide more active support to franchisees if this is the nature of their workforce.

Similarly, more support may be required for franchisees with limited business experience.

A practical and easy way to assist franchisees is to direct them to the Fair Work Ombudsman’s free resources including pay and conditions calculators, online training and employment templates at www.fairwork.gov.au.

Ask them to sign up to the FWO’s MyAccount, where they can interact with advisers and save information relevant to their operations.

Another option is arranging corporate memberships with an industry association or engaging a professional adviser. This will provide franchisees with access to reliable advice.

Importantly, we find members of employer organisations are more likely to comply with laws.

3. Check franchisee compliance

Finally, you should check your expectations are being met. One easy and cost effective way to do this is to set up an employee hotline or email address where workers can raise any concerns directly with you.

This enables you to get to the bottom of any issues quickly and can also provide valuable intelligence about where problems may be forming. Another way to stay on top of what is happening within your network is to regularly audit employee records.

The diversity in the nature of franchise systems means the steps you choose to take might be different to those taken by another franchisor. You need to determine what works for your business.

Following these three steps adapted to the nature of your business, your franchisees and the workforce, will help to ensure a compliant network.

For further guidance see www.fairwork.gov.au/find-help-for/franchises/franchisors

• The Fair Work Ombudsman (FWO) is an independent statutory office responsible for promoting harmonious, productive and cooperative workplace relations and for ensuring compliance with Australia’s workplace laws. The FWO’s free services provide employers and employees with information about fair work practices, rights and obligations. A cornerstone of the FWO’s approach is work with key stakeholders to build strong, effective, long term relationships promoting compliant workplaces.