LEGAL ADVICE
Workplace Relations Laws
What Every Franchisee Should Know John Sier Mason Sier Turnbull
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or most franchisees, wages and other employment costs form a significant proportion of all costs incurred in operating a franchise business. A failure to fulfil minimum employment obligations may result in substantial back-payments as well as the imposition of penalties. It is accordingly critical that employers understand their obligations and do not ‘cut corners’ in attempts to minimise employment costs. Changes in workplace relations legislation, including the introduction of the Fair Work Act, affect not only existing but new employers. This can be complicated where a new franchisee has purchased an existing franchise and has taken over the employees of the previous franchisee. The transition from existing arrangements to the modern awards will present a challenge for small businesses nationally as all employers move towards standard minimum award obligations.
The referral of industrial relations powers in all States, except for Western Australia, means that employers, whether incorporated or employing as a sole trader or partnership, are subject to the Fair Work Act. This means that, with the small exception of sole traders and partnerships in Western Australia, all franchisees are now covered by the federal workplace relations system and the Fair Work Act.
obligations. Minimum wage obligations applicable to existing franchisees may accordingly be different to minimum wage obligations applicable to new entrants into a franchise system. All existing certified agreements, collective agreements, AWAs and ITEAs that have not been formally replaced or terminated continue to operate under the current legislation, even if they have passed their nominal expiry date. This will also be the case where a certified agreement, collective agreement, AWA and ITEA has been inherited as part of a transfer of business. While these agreements continue to operate, from 1 January 2010, all existing registered agreements will be considered to incorporate:
• the National Employment Standards (NES)
to the extent that the registered agreement does not provide more favourable entitlements for employees
• minimum base rates of pay derived from
the applicable underpinning modern awards (note, however, that penalty rates and other modern award entitlements will not be read into the agreement unless the agreement specifically incorporates award conditions).
Not all franchises are created equal
The vast majority of employees who are not subject to a registered agreement will be covered by a modern award. This includes new employers who incorporated following 27 March 2006 that have, up to 1 January 2010, enjoyed the status of being award free.
There can be no assumption that employers operating under the same franchise system will have the same minimum wage
The only group of employees that are not covered by a modern award are those in traditionally award free occupations such
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as managerial employees and professional employees such as accountants and finance, marketing, legal and human resources.
The ten golden rules All employees, whether covered by a registered agreement, modern award or award free, are entitled to the benefit of the NES. All employers should therefore treat the NES as their ten golden rules. The National Employment Standards are: Maximum Weekly Hours: An employer must not request an employee to work more than 38 hours, unless the additional hours are ‘reasonable’. Requests for Flexible Working Arrangements: An employee who is a parent or carer for a child under school age, or under 18 with a disability, may request an alteration in their working arrangements to assist in caring responsibilities. An employer may only refuse such a request on ‘reasonable business grounds’. Parental Leave: An employee with over 12 months’ continuous service is entitled to a period of up to 12 continuous months of unpaid parental leave for the birth of their child or adoption of a child for whose care they are responsible. Annual Leave: Permanent employees are entitled to four weeks of paid annual leave (or five weeks in the case of a prescribed shiftworker). Personal/Carer’s Leave & Compassionate Leave: An employee is entitled to 10 days per year of paid personal/carer’s leave with respect to their own or a family or household