Are my franchisees compliant with minimum wage laws?

The passage of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 has increased the scope and degree of penalties incurred by employers, including franchisees, who fail to meet strict requirements regarding paying their employees. Namely, the amendment includes:

–        The introduction of penalties for failure to keep wage records, even if there is no evidence of underpayment.

–        A reversed onus of proof, leaving employers to prove themselves innocent of not paying wages, even if no evidence is presented against them.

In 2016, prior to the passage of the Amendment, the Fair Work Ombudsman required that Aulion Pty Ltd – franchisee of Caltex – disclose its wage records. By auditing Aulion Pty Ltd’s bank, superannuation fund and accountant, the Fair Work Ombudsman concluded that these records were found to misrepresent the actual pay certain employees had received, with actual wages for some totaling $12 per hour. Aulion was then given a court order to pay $80,190 in penalties, with the director himself paying an additional penalty of $16,038.

The investigation by the FWO into Aulion was part of a broader targeting of its franchisor Caltex, leading Caltex to conduct a costly audit, paying 269 employees an average of $25,800 each by August 2018. Note that these charges a occurred prior to the passage of the Amendment, meaning that current offenses will likely incur more punitive measures, with franchisors potentially being held directly accountable for franchisees underpaying employees, or failing to keep accurate records of payslips.

We recommend that you keep updated wage records – including those of your franchisees – at all times to avoid allegations of failing to meet minimum wage requirements.

For information regarding exact minimum wages and classifications, visit the Fair Work Ombudsman website at: https://www.fairwork.gov.au/