Fairness in Franchising Report and Migrant Worker Taskforce – Looming Crackdown on Employee Exploitation

March 22, 2019

The Parliamentary Fairness in Franchising Report (Report) into the franchise sector delivered last week outlined a number of key recommendations all businesses should be aware of. 

The Report found that underpayment of employee wages and entitlements occurred in many franchises and in response the Committee recommended that:

…the Australian Government ‘amend the Franchising Code of Conduct to require, as part of mandatory disclosure, guidance on employment matters, especially Awards, minimum wages, and overseas workforce issues to be developed by the Fair Work Ombudsman’.

The Report also made recommendations to address exploitation of some franchisees by franchisors by recommending higher penalties for breaches of the Franchising Code, increased powers of the ACCC and greater transparency in disclosure of franchise documents.

It appears likely there will be significant change to franchising laws after the election.

Additionally, on 7 March 2019 the Final Report of the Migrant Workers Taskforce (Taskforce) was released further highlighting the extent of the exploitation of Australia workers. Unsurprisingly, the Taskforce found worker exploitation takes many forms, including ‘cash back’ schemes, pressure to work outside visa restrictions, underpayments, misclassification of employees as contractors and failure to provide leave entitlements.

Whilst the Government responded to a number of these issues in 2017 through the Fair Work Amendment (Protecting Vulnerable Workers) Act, the Taskforce recognised there is a need to do more on the basis the current system is not able to address serious and systemic underpayments. Importantly, the need to improve avenues for migrant workers to recover underpayments, ensuring the FWO is adequately resourced, and introducing criminal sanctions as part of ‘a suite of enforcement tools.’

The Government has responded to the Taskforce report and given in principle approval of the recommendations and actions the Government could take to build on previous reforms and further crackdown on the exploitation of vulnerable workers. The Government has noted that adding criminal sanctions to the suite of penalties available would send a ‘strong and unambiguous’ message to those who believe they can ‘get away with the exploitation of vulnerable workers.’

Whilst at this stage the recommendations are just that, it is clear further change is looming after the election.

FCB Group understands the risks associated with operating a business are multi-faced and complex, and our team of workplace relations specialists are here to help. For more information on what you can be doing to ensure compliance contact our team of experts on 02 9922 5188 to learn more.