Running a business | Recruiting & retaining staff | 4 min read

What does the Fair Work Act mean for franchisees?

Last updated: October 11, 2018

Franchisees can expect to see their franchisor taking a more active role in ensuring compliance with workplace laws as a result of proposed changes to the Fair Work Act 2009.

The requirement to comply with workplace laws is not new, and hopefully the obligations that franchisees have to their employees don’t come as a surprise.

We caught up with Helene Lee from Norton Rose Fulbright Australia to get her top tips for new and current franchisees. Ensure you’re doing the right thing by every employee, every day, and follow these guidelines…

1. Make sure you understand your obligations under the National Employment Standards of the Fair Work Act including:

  • Maximum weekly hours of work (38 hours a week, plus reasonable additional hours. Whether the additional hours are reasonable depends on the industry in which the employee works, the employee’s role, their level of remuneration and whether the employee has family responsibilities).
  • The right of an employee who has completed 12 months’ continuous service to request flexible working arrangements in some circumstances, including if they are the parent or carer of a child who is school aged or younger, have a disability, are 55 years or older or are experiencing domestic violence or supporting someone who is experiencing domestic violence.
  • The right of an employee who has completed 12 months’ continuous service to take 52 weeks of unpaid parental leave on the birth or adoption of a child.
  • The accrual of 20 days of paid annual leave per year of service.
  • The accrual of 10 days of paid personal/carer’s leave per year of service.
  • The entitlement to two days of paid compassionate leave per occasion to spend time with immediate family or a member of the household who is seriously ill or dies.
  • The entitlement to be absent from work to engage in community service activities, including jury service.
  • The entitlement to long service leave.
  • The right to paid leave on a public holiday (although employees can be required to work where that requirement is reasonable).
  • Minimum notice of termination periods and redundancy pay obligations.
  • The requirement to provide new employees with a Fair Work Information Statement on the commencement of their employment.

2. Confirm you comply with minimum payment obligations for all work done by your employees, including under the terms of any modern award or enterprise agreement that covers the employees.

3. Make superannuation contributions by the end of each quarter on behalf of every eligible employee in order to avoid the imposition of a superannuation guarantee charge under Federal superannuation legislation.

4. Make and maintain records in respect of every employee in accordance with the requirements of the Fair Work Regulations. Records must be in writing, accurate, made available to an employee or Fair Work Inspector who wishes to review them and held for a period of 7 years. The records should deal with: General details relating to the employee’s employment (name, commencement date, position, basis of engagement); the payments made; in some cases, the employee’s hours of work; leave; and, superannuation contributions made on behalf of the employee.

5. Provide payslips (hard or soft copy) to employees within one working day of each pay day.

6. Comply with all of your taxation obligations towards your employees, including collecting PAYG withholding amounts from payments made to employees and pay roll tax.

7. Make sure you understand the conditions that apply to you in respect of any employees on a temporary visa (and that both you and your employees understand the obligations they also have under those visas). For example, a student visa holder cannot work more than 40 hours a fortnight while they are studying.

Under the existing provisions of the Fair Work Act, franchisees are already liable for breaches of workplace laws. A range of consequences for breach can be imposed against a franchisee including being ordered to correct underpayments, pay compensation to employees, having penalties imposed against them and having details of their breaches provided to ASIC.

Under the proposed Bill, the penalties that can be imposed on franchisees and franchisors for breaches of workplace laws are significantly higher. The higher penalties are intended to be a deterrent and to make it uncommercial for employers to risk not complying with their obligations.

Seeking, hiring, and retaining top talent is one of the most common issues small business and franchise owners face – check out our guide for clear and simple advice on human capital management.

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