The PIAA has hit out at the proposed franchise legislation passing through the Senate instigated by the 7-Eleven stores underpaying staff, which seeks to include making the franchisor responsible for any underpayments to staff by franchisees.

If passed the bill will increase penalties substantially, with a $108,000 fine for franchisors who fail to act if a franchisee is breaking the law in regard to wages, or $540,000 if the franchisor is party to the act.

More than 10 per cent of print businesses in Australia are franchises, there are around 500 operating, including Snap, Kwik Kopy, Worldwide, Signarama and Signwave.

Andrew Macaulay, CEO at the PIAA says, “The Bill makes the mistake of assuming that every franchisor has control, influence and a direct line of sight over the workplace relations practices of each of its franchisees, when they do not.  Whilst this was the case in the well-publicised 7-Eleven cases, for a range of practical and commercial reasons it is rarely the case in the franchising sector; nor should it be required to be so.’’

Macaulay continues, ‘’In any franchise where the franchisor does exercise control or influence over the franchisee’s workplace practices, then it’s fair enough to impute some responsibility to the franchisor when a franchisee underpays its workers. But in our experience, and indeed the experience of the franchising sector in general, most franchisors do not have this degree of control.’’

‘’To reduce legal exposure and make this assumed control a reality, most franchising operations would need to be fundamentally re-structured, in turn reducing the marketability and attractiveness of franchising as a business model.  The Government has not produced any cost-benefit analysis to suggest that this is what the economy needs.”

The Fair Work Amendment (Protecting Vulnerable Workers) Bill is moving through the Senate, with proposed amendments from both sides of the political spectrum.

Macaulay explains, “On its face, the Bill makes franchisors and holding companies responsible for underpayments by franchisees or subsidiaries where they knew or ought to have reasonably known of contraventions of workplace relations laws, and failed to take reasonable steps to prevent them.”

Senator David Leyonhjelm of the Liberal Democratic Party and Cory Bernardi of Australian Conservatives have combined on a proposed amendment, which would seek to include the words “…in the ordinary course of business” throughout the bill. This would shift responsibility away from franchises, to franchisees, by asserting that franchises would only be responsible if actively monitoring franchisees was part and parcel of the business structure.

As print franchise shops are run fairly autonomously from the head office, this would alleviate some responsibility and the costs of accountability from franchise companies.

Moving the opposite direction, a proposed amendment from Labor Senator Doug Cameron would render anyone an ‘indirectly responsible entity’ if they are in any way involved with the supply network.

This would include situations in which ‘there is an arrangement, or a chain or series of two or more arrangements, for the production or supply of goods or services by the worker (the supply framework), and if the person is party to an arrangement in the supply framework.’

Senator Nick Xenophon has proposed amendments which deal with legislative powers, who has the right to wield them, and how cases should be prosecuted, while the Green’s Senator Lee Rhiannon introduced amendments relating to how underpaid workers can pursue their claims through national and state courts.

Mary Jo Fischer, director Government Relations, Printing Industries says, “The Bernardi amendments would be very helpful, and we hope the government would accept them. The amendments would mean that a franchisor would only be held jointly responsible for the franchisee if they had influence or control over their workplace relations responsibility.

“At the moment, the franchisor can have that liability, even if the franchisor has no idea as to what the franchisee is doing.

“That amendment is good for franchisees too, as it would reduce the red tape the bill would otherwise place on the party.

“From our perspective, the Xenophon amendments are good. They would put some checks on the increased Ombudsman’s power.

“Labor’s amendments are a disaster, which is what anyone with common sense would argue. They would seek to make the provisions of the bill apply in other business relationships, including independent contracting, labour hire, and the supply chain in general.

“It would create an employment relationship when there is not one, and bring all the responsibilities that come with that.”

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