In a recent inquiry by the Senate Standing Committee on Education and Employment; a recommendation has been made to change the Franchising Code of Conduct to include a ‘shared responsibility’ for franchisors where franchisees underpay their employees.

What does this mean for you?

If you are a franchisor and your franchisee has underpaid their employee, YOU could potentially be found liable for the underpayment. But it wasn’t you who underpaid the employees in the first place, you ask? The inquiry has found that fact to be irrelevant and want to place some responsibility on you.

The recommendation came from the report ‘A National Disgrace: the exploitation of temporary work visa holders’ where the widespread wage fraud of two thirds of 7-eleven outlets in Australia was referenced. Recommendation 26 of the report specifically recommends changes to the Franchising Code as a direct response to the 7-eleven scandal.

Following the report, the Federal Treasury and the Australian Competition and Consumer Commission have been asked to review the Franchising Code to place some responsibility on the franchisor.

So if you are a franchisor, they’re looking at YOU to turn the blame on.

You’re now in the Fair Work Ombudsman’s sights. The report has also recommended that the resources and powers of the Ombudsman be reviewed and increased in order to crack down on these underpayments by franchisees and reflect the liability back on franchisors.

For more information on liability of franchisors or a potential underpayment, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.