Thursday 2 March 2017

Australia: Upcoming Law Would Be Disastrous And Here Is Why


Employers have warned that proposed new laws making head offices liable for the underpayment of workers by franchisees could discourage investment and send some small businesses to the wall.

In the wake of underpayment controversies involving high-­profile companies including ­7-Eleven and Pizza Hut, Employment Minister Michaelia Cash yesterday announced franchisees would face a tenfold increase in penalties for the deliberate and systematic underpayment of employees.

Franchisors would be liable for franchisee underpayments where a head office had significant influence or control over the franchisee, knew or should have known about the underpayment, and failed to take reasonable steps to prevent the underpayment.

Senator Cash said franchisors which were complicit, or wilfully blind to underpayments in their network, would be responsible for rectifying the underpayments.

The warning comes as Immigration Minister Peter Dutton today prepares to ban foreigners from taking jobs at fast-food outlets such as McDonald’s and KFC.

The Daily Telegraph reports that Mr Dutton will scrap a deal that allowed such outlets to import staff rather than use Australian teenagers.

Franchisors face a penalty of up to $54,000/£32,000 for each franchisee contravention. The maximum penalty for a franchisee will be $540,000/£32,0000 for serious under­payments, and $108,000/£173,187 for ­individuals. The practice of “cashback” payments, where workers are forced by their boss to hand back part of their wages in cash, would also be outlawed.

Australian Industry Group chief executive Innes Willox said making franchisors liable for franchisee breaches could discourage major international franchise operators from initiating new investments in Australia.

He said it could lead to franchisors restructuring their businesses and terminating their relationships with franchisees. Franchisors could also pass on substantial auditing costs to franchisees. “This could lead to franchisee businesses no longer being viable,’’ he said.

The Franchise Council of Australia said the liability provisions were unprecedented. It said the trigger for liability should be where a franchisor has substantial control over workplace relations.

“To overcome significant uncertainty and harm from the ‘joint employer’ provisions in the bill that are in laws nowhere else in the world, the concept of ‘control’ must relate to workplace relations if the aim is to impose ‘joint employer’ liabilities onto franchisors for the workplace non-compliance of franchisees,’’ it said.

Senator Cash said the laws were targeted at those who set out to do the wrong thing. “The new increased penalties and liability provisions will not impact the vast majority of employers who do the right thing, or who simply make honest mistakes,’’ she said.

“When someone abuses their power, whether it is union bosses intimidating small businesses or dodgy employers exploiting vulnerable workers, the Turnbull government will take action.”



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