Franchisor responsibilities in the spotlight

Franchisor responsibilities in the spotlight

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Franchisor responsibilities in the spotlight

example flexible working arrangement

The Fair Work Ombudsman has two cases before the courts for prosecution of a “responsible franchisor” for Fair Work breaches by their franchisees – these are the first prosecutions of their kind.

Back in 2017, legislation was passed to increase penalties for serious contraventions of workplace laws. Among other matters included in the legislation were new legal obligations for franchisors and holding companies that effectively meant that they could be held legally responsible if their franchisees or subsidiaries did not comply with workplace laws.

In order for franchisors to be held accountable, they would have to be found to be a “responsible franchisor” –  one which has a significant amount of influence or control over the business affairs of the franchisee. This could be the case if the franchisor can provide direction on (or exercise control over) financial, operational or corporate affairs  which could involve such matters as trading hours, sales targets or quotas, business expenses and costs, staffing levels, etc.

Consideration is also given to the degree to which the franchisor is involved in management or operational decisions of the franchisee’s business in practice. 

Case #1 – 85 Degrees Coffee Australia Pty Ltd

The Fair Work Ombudsman alleges that 85 Degrees was liable as a “responsive franchisor entity” for alleged non-compliance by eight 85°C Daily Café outlets in Sydney in 2019. This includes underpayments of wages totalling $32,321 and breaches of record keeping and payslip requirements.

85 Degrees, which is based in Taiwan, entered into an Enforceable Undertaking with the Fair Work Ombudsman in 2015 following the identification of significant underpayments of wages back then.

85 Degrees was also fined $475,000 in court proceedings last year for exploiting young Taiwanese students in Sydney through sham internship arrangements. in 2016 and 2017.

The FWO now alleges that 85 Degrees’ knowledge of compliance issues as a result of the Enforceable Undertaking and subsequent audits, its knowledge of its franchisees’ financial circumstances, and its knowledge that the franchisees had limited English and limited awareness of workplace laws, is also relevant to its liability. 

This recurrent non-compliant behaviour is a good example of the conduct that has given rise to laws making wage theft a criminal offence.

Case #2 – Bakers Delight Holdings Pty Ltd 

It is alleged that 142 mostly young staff at Bakers Delight outlets in Kingston, Lindisfarne and Eastlands in Hobart Tasmania were underpaid $1.25 million between July 2017 and October 2020. In one case of a young apprentice baker, it is alleged that he was underpaid $106,281.

Fair Work Inspectors allegedly discovered that staff were underpaid entitlements including minimum wages, weekend and public holiday penalty rates, overtimes rates, leave entitlements and minimum shift pay, and had money unlawfully deducted from their termination pay.

It is alleged Bakers Delight Holdings is liable for $642,162 in underpayments at the three stores that occurred after February 2019 because it became aware the franchisee operating the stores had been underpaying staff but failed to take preventative action – and therefore it either knew or should reasonably have known further underpayments would occur.

Bakers Delight Holdings commissioned an audit of the franchisee (Make Dough Enterprises) and provided the findings of the audit which identified a number of contraventions to the franchisee in February 2019. The Fair Work Ombudsman alleges that, as a result, from that point on the franchisor knew about the underpayments and breaches but did not take action to ensure that they were remedied. 

So it appears that while in this case, the franchisor made some attempt to educate the franchisee about their obligations but has been found by the Fair Work Ombudsman not to have done enough to exercise its “responsible franchisor”obligations.

How we can help

When the legislation came in in 2017, we developed a suite of services to assist franchisors to meet these new “responsible franchisor” responsibilities under the Fair Work Act.

These services included:

  • Franchisee compliance kits tailored for the particular industry and franchise group covering National Employment Standards, relevant award provisions, record keeping and payslip requirements, superannuation
  • Online compliance questionnaires with reports generated for individual franchisees on their compliance status
  • Payroll audits of franchisees and calculation of underpayments where applicable
  • Representation and support in dealings with the Fair Work Ombudsman on any alleged underpayments

Need help?

Give us a call on 1300 108 488 to arrange your free first consultation to see how we can help with advice and support on this or any other HR matter. 

 

CONTACT US

Ridgeline Human Resources Pty Ltd
ABN : 24 091 644 094

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0438 533 311

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Psychosocial hazard #2 – Low job control

Psychosocial hazard #2 – Low job control

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Psychosocial hazard #2 – Low job control

example flexible working arrangement

The next psychosocial hazard that is listed in Safe Work Australia’s Model Code of Practice on Managing Psychosocial Hazards at Work is “low job control”.

Why is low job control a psychosocial hazard?

This hazard involves workers who have little control or say over the work or aspects of the work including how, when and where the work is done

Some questions that you might ask to assess whether there are any low job control related psychosocial hazards in your workplace include:

  • Do people require permission or sign-off before being allowed to progress routine or low risk tasks?
  • Are people not permitted to make decisions that are within the scope of their abilities?
  • Is work subject to prescriptive processes that do not allow workers to apply their skills or judgment?
  • Are changes made to people’s work areas without consulting them?
  • Are changes made to work processes, systems or resources without consulting the affected workers?
  • Do you have managers who micro manage people to ensure that they are on top of things and people don’t make mistakes?
  • Do work processes and systems limit people’s ability to take breaks or change tasks?
  • Do excessive work demands make it difficult for workers to take breaks or to maintain reasonable working hours?
  • Are workers often in situations which expose them to aggression or abuse?
  • Is the physical work environment something that workers cannot control or get relief from (eg working in adverse climatic conditions or dusty or smoky environments)?

This list is not exhaustive and while we have based these posts on the model code produced by Safe Work Australia, there can be differences in the specific details for each State or Territory. So you need to check that in the jurisdiction in which your workplace lies.

Need help?

Give us a call on 0438 533 311 to arrange your free first consultation to see how we can help with advice and support on this or any other HR matter. 

 

 

CONTACT US

Ridgeline Human Resources Pty Ltd
ABN : 24 091 644 094

enquiries@ridgelinehr.com.au

0438 533 311

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TELL US WHAT YOU NEED HELP WITH

Psychosocial Hazard #1 – Job Demands

Psychosocial Hazard #1 – Job Demands

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Psychosocial Hazard #1 – Job Demands

example flexible working arrangement

This is the first in a series of blogs in which we will unpack the 14 psychosocial hazards identified in the Model Code for Managing Psychosocial Hazards at Work published in 2022 by Safe Work Australi.

The first of those is “Job demands”.

    Why are job demands a psychosocial hazard?

    This hazard involves sustained or intense levels of physical, mental or emotional effort which are unreasonable and chronically exceed a worker’s skills or sustained low levels of physical, mental or emotional effort.

    Some questions that you might ask to assess whether there are any job demand related psychosocial hazards in your workplace include:

    • Are there long, irregular or unpredictable hours of work?
    • Are there insufficient breaks or not enough recovery time between work periods?
    • Are there people who don’t take time off (and perhaps might have an excessive annual leave balance)?
    • Does anyone struggle with the amount of work that they have to do?
    • Does anyone struggle with the complexity of the work that they have to do?
    • Are timelines for completion of work too demanding?
    • Is the level of concentration required to do a job too intense?
    • Do people have challenges in managing competing priorities?
    • Is anyone concerned about the impact that making a mistake would have?
    • Does anyone’s work involve managing stressful or distressing situations?
    • Do people have to manage others’ emotions or perhaps suppress their own?
    • Is there anyone who doesn’t have enough work to do?
    • Do people have to wait on others to complete work before they can do their own or before they can access the tools and resources that they need to do their jobs?
    • Does anyone do very monotonous and repetitive work?
    • Is there anyone who finds the work just too easy and unchallenging because they have higher abilities? 

    This list is not exhaustive and, while we have based these posts of the model code produced by Safe Work Australia, there can be differences in the specific details for each State or Territory. So you need to check that in the jurisdiction in which your workplace lies.

    Need help?

    Give us a call on 0438 533 311 to arrange your free first consultation to see how we can help with advice and support on this or any other HR matter. 

    CONTACT US

    Ridgeline Human Resources Pty Ltd
    ABN : 24 091 644 094

    enquiries@ridgelinehr.com.au

    0438 533 311

    PARTNER LINKS

    TELL US WHAT YOU NEED HELP WITH

    Multiple lessons for employers

    Multiple lessons for employers

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    Multiple lessons for employers

    example flexible working arrangement

    A recent case in the Fair Work Commission has produced far greater consequences than might have been anticipated by an employer who faced an unfair dismissal dismissal claim from a 67 year old worker who had been employed since 2010 before being sacked in February. 

    The Evidence

    The employer claimed that the worker was sacked for a variety of reasons such as disposing of produce, bullying, threatening and making racist comments to other staff, being rude to customers and taking time off for health reasons. 

    However, the employee denied the reasons given by the employer and said that he hadn’t been told why he was sacked. He told the Fair Work Commission that he was told by his employer to take a week off while new staff were trained and that turned into 5 weeks during which time he wasn’t paid and was denied annual leave.

    Then he said he was sacked without being told why.

    The Compliance Complications 

    There was firstly, the question of whether the employee was unfairly dismissed and, based on the evidence, he clearly was on both substantive and procedural grounds.

    There were then a number of compliance issues that emerged in the course of proceedings in that the employee claimed that:

    • Throughout the period of his employment, he had been paid a flat rate of $13.50 per hour which is well below award rates and the federal minimum wage
    • He had illegally been stood down without pay and denied annual leave 
    • He had not been paid any notice or his final leave entitlements on termination of employment
    • He had only ever received one payslip over the whole course of his employment

    Other factors

    In considering unfair dismissal claims, the FWC will have regard to whether the termination is harsh, unjust and unreasonable. In the absence of a valid reason or process, the termination is clearly unjust and unreasonable.

    Taking into account the employee’s age and length of service, termination would also be seen to be especially harsh, perhaps even if there had been a valid reason.

    The Outcomes 

    FWC Deputy President Ian Masson accepted the employee’s evidence, noting that the employer had not challenged it. 

    He awarded the maximum compensation available ie 6 months wages which amounted to more than $20,000 based on award rates at the time of termination.

    The employer has also been referred to the Fair Work Ombudsman for investigation and enforcement action relative to the reported underpayments of wages.

    Those investigations won’t be restricted to this ex-employee’s case as there would clearly be a probability that other workers have also been underpaid.

    As a result, the employer will be likely to have a substantial underpayment bill to pay as well as the prospect of very significant fines for breaches of the Fair Work Act.There could also be issues around superannuation (referral to the Australian Taxation Office) and wage theft (referral to Wage Inspectorate Victoria). 

    The Lessons

    This an extreme case where the employer has clearly done the wrong thing on a number of counts but it does underline the importance of ensuring that:

    1.  You have your house in order in terms of your compliance with employment laws, minimum wages and modern awards.
    2. You implement fair and demonstrable processes for dealing with performance and conduct issues so that you can demonstrate the fairness of any termination of employment that you might have to enact.
    3. You have access to competent professional advice on employment matters and you access that before taking such significant action as terminating employment.

    We can assist with all of that. For you free first consultation, contact us on 1300 108 488 or use the “Tell us what you need help with” box below and we will give you a call.

     

    CONTACT US

    Ridgeline Human Resources Pty Ltd
    ABN : 24 091 644 094

    enquiries@ridgelinehr.com.au

    0438 533 311

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    Your Swiss Army knife

    Your Swiss Army knife

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    Your Swiss Army knife

    example flexible working arrangement

     

    One of the psychosocial hazards that research is showing to be at the forefront of the list that organisations need to address is that of lack of role clarity.

    One of the tools that we can use to help to address that is the humble Position Description (PD) which has been around for decades and can be found in lots of different forms. 

    In most places where I have worked as an employee or as a consultant, PDs are commonly treated as something we have to have for our quality accreditation or our HR compliance or something that we give people when we advertise a job or when they start employment with us. They are then filed away and forgotten about. 

    This is really unfortunate because the PD is a very versatile tool and arguably one of the most powerful in a manager’s toolbox. 

    So how can PDs be used to good effect? Here are 5 ways that we have used them.

    #1. Compliance satisfaction

    Every employer has a statutory duty to ensure that every employee is properly instructed in their duties and has the skills and abilities to perform their tasks safely for themselves and others. This is enshrined in workplace health and safety law and is also an important part of employment law in general.   

    The PD is an effective aid to that instruction and skills assessment and enablement. It helps with documentary evidence of satisfaction of the statutory duties that all employers have as well as in dealing with employee grievances and actions against the employer (eg in demonstrating reasonable management action in response to an adverse action or bullying complaint).  

    #2. Recruitment effectiveness

    If you are going to be effective in recruitment, you first want to know what the attributes required for competent performance of a role are so that you can prepare a fit advertisement. 

    You then need to identify selection criteria and the how to assess candidates by considering the attributes required in the role and the best ways to test candidates for those attributes. 

    You also want to communicate what attributes are required to candidates (so that the right ones apply).  

    A properly constructed PD helps with all of that and assists you to make an informed and evidence-based selection decision.

     #3. Targeted development

    The content in PDs that details the skills, knowledge and attributes required provides a great foundation for assessing the technical strengths and weaknesses of an employee and why that is the way they are.  

    That, in turn, can lead to targeted development that leverages those strengths or builds on areas of weakness. That will deliver the optimal return on investment in learning and provide the best support and recognition for the individual employee.  

    It is also a great aid to onboarding of employees and getting them up and running quickly because their role and responsibilities are clearly communicated and easily understood from day one.

     #4. Performance management

    Clearly, if we are going to expect people to perform their roles effectively, we have to tell them what their roles and responsibilities are and what performance standards are expected. A good PD does this and helps employees to be more productive and aligned in performance as a result.

    Conversely, when performance management concerns arise, it is very important to go through a methodical, relevant and procedurally fair process that is supported by documentary evidence.  

    The PD plays a critical part in this as it describes what is expected of the role the person is performing and the attributes required to meet those expectations. It also provides documentary evidence that the employer has clearly communicated the duties and expectations to the employee.  

    Additionally, as with development of employees, the PD can be a useful tool for analysing why an employee might not be meeting expectations eg because they are lacking in some particular attribute (skill, ability or knowledge) required for the role.  

    #5. Better employee engagement and wellbeing

    Study after study tells us that key elements in good employee engagement and wellbeing practice include: 

    • giving people clarity about their roles and the expectations of them
    • providing the support that they need as an individual to be successful in their roles
    • having clear meaning and purpose in the work that they do and
    • feeling psychologically safe by feeling included and informed and involved in their work, in their relationships and in their team.

     A well-structured PD helps with all of these factors when all of the PD purposes outlined above are part of everyday practice in organisations.

     So that is why I think of the PD as the HR Swiss Army Knife – it can be used constructively in so many different ways. 

     Of course, it is just a tool and there are many others in the HR toolkit that need to be used to deliver best practice in People and Culture management.

    Do you need to reimagine how you use PDs in your business?

    How can we help?

    We can provide you with tools like Position Descriptions and coaching in how to apply these tools effectively to control psychosocial hazards, otherwise meet your compliance obligations and build better communications and employee engagement.

    If you want to know more, give us a call on 0438 533 311.



    CONTACT US

    Ridgeline Human Resources Pty Ltd
    ABN : 24 091 644 094

    enquiries@ridgelinehr.com.au

    0438 533 311

    PARTNER LINKS

    TELL US WHAT YOU NEED HELP WITH

    The biggest increase in minimum wages ever

    The biggest increase in minimum wages ever

    Latest News & Events

    The biggest increase in minimum wages ever

    superannuation changes

    On Friday 2 June 2023, the Fair Work Commission handed down this year’s Annual Wage Review and it delivered the biggest ever increase in the federal minimum wage and award rates.

    The Minimum Wage Panel decided to do it in two steps:

    1. To award a 5.75% increase in minimum wages in modern awards (up from last year’s 4.6%) and
    2. To raise the benchmark for the Federal Minimum Wage from the rate for classification C14  to the rate for classification C13 under the Manufacturing and Associated Industries and Occupations Award 2020 causing an aggregate increase of a record 8.65% (up from last year’s 5.2%) in the federal minimum wage and the lowest rung of award rates.These increases will apply from 1 July 2023 when the federal minimum wage will move up to $23.23 per hour (plus 25% for a casual employee).

    A 0.5% increase in the superannuation guarantee rate will also apply from that date when it moves to 11% of ordinary time earnings.

    Impact of raising the benchmark for the federal minimum wage

    The lowest classification level in many awards has historically been at the level of the federal minimum wage. This level has commonly been applicable to new employees to an industry while they undergo basic training which, depending on the award, might be for a maximum of between 38 hours and 3 months.

    So it generally has quite limited application in practice albeit that in industries where there might be high utilisation of casual and seasonal employees entering the workforce e.g. in hospitality, restaurants, alpine resorts, horticulture or wine industries.

    Other industries with similar features like retail and fast food already have minimum award rates that are significantly above the federal minimum wage and so are not as affected by the decision to raise the benchmark.

    What employers need to do

    Regardless of whether you engage people on award rates or on overboard payments or on annualised salaries or wages or some other remuneration arrangement and whether that is based on a modern award or an enterprise agreement or a common law contract or a handshake (which really is a common law contract anyway), you need to review all of that to ensure that your remuneration levels remain at or above award rates from 1 July 2023.

    It is also a good idea to review your employment contracts while you are at it.

    Need help?

    Give us a call on 1300 108 488 to arrange your free first consultation to see how we can help with advice and support on this or any other HR matter. 

     

    CONTACT US

    Ridgeline Human Resources Pty Ltd
    ABN : 24 091 644 094

    enquiries@ridgelinehr.com.au

    0438 533 311

    PARTNER LINKS

    TELL US WHAT YOU NEED HELP WITH