PIAA: Franchise Bill full of flaws

PIAA: Franchise Bill full of flaws
Federal govt introduced Fair Work Amendment Bill to parliament, PIAA says it penalises majority of franchise operators

This month the Federal Government began to debate the Fair Work (Vulnerable Workers) Amendment Bill to parliament, the PIAA has condemned the bill saying it penalises the majority of franchise operators.

There are more than 500 franchise stores in the print industry, most with between two and in some cases, up to 30 staff in them, together representing around a quarter of the entire print industry workforce, and print is the biggest manufacturing industry left in Australia. Franchise groups include Kwik Kopy, Snap, Worldwide, MBE, Minuteman, Signwave and Signarama.

Mary-Jo Fisher, director of government relations at the PIAA says, “In trying to stop a few unscrupulous businesses from deliberately exploiting vulnerable workers, such as in the well-publicised 7-Eleven events, the Bill over-reaches and hampers law-abiding franchises.

“The Bill does not justify why it needs to police the majority of trustworthy businesses and offers no evidence that it will do more than the existing laws to stop the handful of unscrupulous businesses," says Fisher.

Fisher says the Bill’s flaws are many, “To start with, in addition to making responsible a franchisor who, for a range of sound commercial reasons, might not have a line of sight over a franchisee’s operations, the Bill uses terms which are uncertain in their meaning and scope," she says.

She continues, “The Bill makes a franchisor equally liable with a franchisee (both in terms of a fine and payment of underpayments to workers) for a franchisee’s breach of Fair Work laws, when a franchisor had a ‘significant degree of influence or control’ over ‘the affairs’ of a franchisee and ‘knew or ought reasonably have known’ of a franchisee’s actual or likely breaches and failed to ‘take reasonable steps’ to prevent them."

[Related: PIAA: FWC a danger zone]

Fisher asks how can a franchisor work itself clear of those terms, even if it pays top-dollar for top-advice to try to make sure it is doing the right thing? 

“How can a franchisee provide appropriate information and reports to the franchisor without incurring additional costs?” she says.

“The bottom line is that both franchisors and franchisees will face increased red tape; paperwork trails; auditing and internal costs, in order to try to reduce risks. It is mostly for nonsense,” Fisher says.

Fisher also notes that, “Under the Bill, a breach of the Fair Work laws exposes both franchisor and franchisee to increases in current monetary penalties of between 2-fold and 10-fold – again, without evidence that increased penalties will either change the conduct of the bad or not penalise the good.

“Without adequate justification, the Bill gives the Fair Work Ombudsman powers equivalent to ASIC and the ACCC to require information; compel the production of documents; and interrogate those involved (including employees and contractors),” Fisher says.

Fisher says these consequences are reasonable for the few rare, distressing and well-publicised franchise examples in other industries, such as 7-Eleven, Baiada Poultry and Yogurberry. 

“These examples show that our existing laws do work. But for the law-abiding majority: the bill goes too far,” Fisher says.

A Senate Committee report into the Bill recommended (only) replacing the word ‘affairs’ with ‘workplace terms and conditions’

“This amendment alone would be valuable and it is our responsibility to convince the Government to make it,” says Fisher.

The PIAA has been working with the Franchising Council of Australia, both on the substantive issues around the Bill and in lobbying. PIAA met with members of Parliament in Canberra last week to convince them that Senate debate of the Bill should be delayed until June and that the Bill needs significant amendment to stop it smothering franchise operations. 

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