17 October 2017

Franchise innovation: A practical solution to assist compliance with new workplace laws

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The Velpic eLearning platform is a first and innovative training tool on the market that provides a solution beyond a review of a franchise agreement.

Piper Alderman, a national commercial law firm and Velpic Ltd, an ASX listed company, two leaders in franchise innovation, have come together to offer franchisors and franchisees a practical, affordable and innovative solution to assist compliance with the new workplace laws.

The Changes to the Law

From 27 October 2017, many franchisors will be at risk of being held responsible for their franchisees or subsidiaries failure to follow workplace laws, as a consequence of the implementation of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017.

Franchisor can now be held liable for their franchisee’s contravention of the National Employment Standards, Modern Awards and Enterprise Agreements. The wording of the amendments to the Fair Work Act is very broad and include any breach of one of these provision. This is not limited only to underpayment of wages.

Critical Issues for the Franchisor

A franchisor will now be held responsible for contraventions of the Fair Work Act by their franchisees if it is viewed that the franchisor knew, or could reasonably be expected to have known that a breach by the franchisee occurred or was likely to occur.

Franchisors can be held responsible for their franchisee’s breach of the workplace laws if it is found that the franchisor knew or reasonably should have known about their franchisee’s breach and failed to take reasonable steps to prevent it.

Penalties have increased tenfold. For example, an individual can be fined up to $108,000 while a corporate franchisor can receive a fine of up to $540,000.

A franchisor will not be able to seek an indemnity for any penalties imposed on them from the franchisee.

Franchisors and holding companies can discharge their responsibility under the Fair Work Act by showing they have taken reasonable steps to prevent their franchisee from breaching the workplace laws.

The Solution

Piper Alderman and Velpic have produced an eLearning platform that allows:

(i) A franchisee to obtain some basic training and insights on:

  • Their obligations under the Fair Work Act, covering areas such as paying employees, keeping staff records, recruitment of new staff, dismissal of employees and the National Employment Standards;
  • Dealing with sexual harassment within their business;
  • Their obligations in relation to workplace health and safety, covering areas such as identifying hazards within the premises and training employees;
  • How to deal with customers covering areas such as requirements of the Consumer Code, what statements needs to be avoided and managing complaints;
  • The required standards by their specific industry, such as handling food safely.
  • To participate in training at a time convenient to them without impacting their business;
  • To participate in training with their employees without impacting their business; and
  • To save money on the costs of personal attendance to train them and their staff.

(ii) A franchisor:

  • To monitor the franchisee’s training;
  • To create, upload and modify their policies, procedures and instructions to their franchise network;
  • To save costs in employing additional trainers to attend the franchisee’s premises to train the franchisee and staff; and
  • To have peace of mind knowing that it has offered its franchisees a solution to assist them to comply with their obligations with various laws.

The Future

A franchisor is required to take “reasonable steps” to prevent its franchisee’s from breaching workplace laws. The definition of what constitutes “reasonable steps” is yet to be seen.

Many other law firms and service providers have offered franchisors the opportunity to “review franchise agreements and processes” as part of their service to minimise a franchisor’s risk since the changes to the Fair Work Act has come into effect.

Piper Alderman and Velpic believe that a franchisor must consider taking steps beyond a mere document review, if it is to ensure the best possible chance of complying with its obligations under the Fair Work Act.

The Velpic eLearning platform is a first and innovative training tool on the market that provides a solution beyond a review of a franchise agreement.

To start a free trial, book a free demo or speak to one of Velpic’s customer representatives today please visit: velpic.com/franchising or call 1300 835 742.