In The News

Mon 13 Feb 2017

Franchisee Employee Matters – Matter!

Business Planning & Strategies

Last year we provided an update regarding the issues the 7-Eleven franchise network’s suffered as a result of the failures of a number of its franchisee’s meeting their employer obligations. These issues have been an ongoing saga for the network, where following the Fair Work Ombudsman’s further investigations, the Fair Work Ombudsman has now published a Proactive Compliance Deed signed by 7-Eleven’s Franchisor on 6 December 2016.

In what many are calling a landmark agreement, 7-Eleven’s Franchisor have now agreed to a number of measures to seek to prevent a re-occurrence of the issues that have plagued this network and instead promote a culture of compliance with relevant employment laws amongst all within their network.

Some of these measures include:

  • increased monitoring via the implementation and operation of biometric shift scanning systems and the roll out of CCTV systems in all outlets;
  • the installation of a central payroll system that will specify lawful minimum rates of pay and cannot be manually altered by franchisees;
  • employee payments being made by EFT rather than cash;
  • the Franchisor at its own expense appointing a Senior Manager to conduct internal auditing as well as engage an external auditor to conduct three annual workplace audits. These parties also having reporting obligations to the Fair Work Ombudsman;
  • increasing and having available to franchisees greater education and knowledge on workplace obligations, including via having prospective franchisees provided with the applicable minimum wages, loadings, penalty rates and overtime rates of pay for full-time, part-time and casual employees of each classification under the relevant Fair Work Instrument. This information is provided together with detailed modeling of expected wage costs required to operate a particular outlet;
  • requiring franchisees to sign a compliance commitment document certifying that its directors, officers and managers understand their Commonwealth workplace obligations; and
  • establishing a complaints hotline and email account service with interpreter accessibility.

These are substantial measures to meet what we suggest are the growing community expectations on franchisors.

Saying this, we suggest that the 7-Eleven situation was in many ways unique and the measures now being taken are the result of the Fair Work Ombudsman’s belief that 7-Eleven had “a culture of underpayment and false records that had become normalised in its network” and that by failing to “recognise the need for additional financial support for some stores…these factors contributed to the exploitation of vulnerable workers.”

Given the above, as the new Year starts, if you have not already, this is a prime time for review and consideration of your risk exposures and what improvements should be implemented to create positive internal cultures and get ahead of the potential legal obligations that may be implemented as a result of what happened with 7-Eleven.

Please note this does not purport to be comprehensive advice relevant to your circumstances. Consequently, specific legal advice for each of your circumstances should be obtained first before taking or not taking any action in respect to this area.

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