Payroll Blog

Can you be held responsible for your franchisees’ non-compliance with workplace laws?

Fair Work Amendment

On 15 September 2017, the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 took effect. Along with the Amendment came new provisions making franchisors responsible in some circumstances for their franchisees or subsidiaries not following workplace laws. Could you be facing potential penalties under the Act as a result?


Workplace relations compliance needs to be part of any company’s long-term, sustainable business plan – whether you run a small-medium sized enterprise, a division of a multinational, or a franchise.

Compliance with relevant workplace legislation can help businesses meet their obligations, understand labour costs and retain employees. Conversely, failing to meet workplace obligations can have serious consequences for any business. As a franchisor, these consequences can be felt by the entire brand, as public perception is related to the brand itself rather than a specific franchised business.

Under the changes to the Act some franchisors may now also be held legally responsible if their franchisees don’t comply with certain workplace laws including:

  • Entitlements under the National Employment Standards
  • Awards, agreements and workplace determinations
  • National minimum wage orders, equal remuneration orders and guarantees of annual earnings
  • Rules about methods and frequency of payment, including deductions from wages or spending/paying money
  • Pay slips and record-keeping obligations
  • Sham contracting rules

Therefore, it is more important than ever to make sure workplace laws are understood and applied throughout your franchise system.

Outsourcing Your Payroll

At E-Payoffice, our cloud based payroll system can be used to maintain a consistent approach to payroll across a franchise network, and to easily identify potential breaches of compliance.

When dealing with a franchise, we work with the Franchisor at head office level to set up the correct Award/Agreement table and develop a wage rates table that can be applied across the network. We then work with the franchisees to develop their own payroll that allows them to roster staff
and manage time collection via Facial recognition at the individual store level.

The cloud payroll system ensures compliance benefits such as:

  • Each payroll across the franchise network uses the same Award Table and Rate table so as to apply the correct pay rules and rates to all staff
  • The Franchisor can see all payrolls linked so they can check compliance whenever they require
  • All leave is tracked and calculated as per NES
  • All reporting and payslip requirements are met and stay online for seven years
  • The correct Superannuation is calculated and paid.

Key Points for Franchisors

As a Franchisor, it is your responsibility to work with your franchisee(s) to act on non-compliance promptly and resolve any issues that you might identify. Make sure that your franchisees know the consequences if they fail to meet their obligations and act swiftly if breaches occur.

Responsible Franchisors can be subject to enforcement action for breaches of their extended liability provisions in the Fair Work Act and may be subject to court proceedings. For more information on how, and what, you may be held liable for visit the Fair Work website.

To discuss your payroll needs and how E-Payoffice can help to ensure compliance across a franchise network, contact Wendy Blanch on (02) 8860 9521.

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