Summary by Troy Wild, Director NRA Legal
On 9 May, the Senate Education and Employment Legislation Committee (‘the Committee’) released its report into the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (‘the Bill’).
The Committee recommended that the Senate pass the Bill, subject to three substantive recommendations.
The first of these recommendations relates to the definition of what is a responsible franchisor entity. At present, the Bill defines a responsible franchisor entity as a franchisor that “has a significant degree of influence or control over the franchisee entity’s affairs.”
The Committee noted the concerns raised in various submissions that the word ‘affairs’ was too broad. Theoretically, it could make a franchisor liable for contraventions of employment law when the franchisor in truth only exercised control over, for example, the franchisee’s tax affairs.
The Committee recommends that the government amend this definition so that the term ‘affairs’ is specifically associated with workplace relations matters.
The Committee noted that, despite its name, the Vulnerable Workers Bill targets only a single sector (franchises) and does not specifically address the exploitation of workers in other sectors such as labour hire.
The Committee recommended that the government, as part of its Migrant Worker Taskforce, consider further reforms in this area.
Various submissions were made to the Committee expressing concern over the proposed expansion of the Fair Work Ombudsman’s coercive powers.
The Committee did not consider there to be a blanket concern with respect to the Ombudsman’s use of these powers, however expressed concern that the Ombudsman did not appear to appreciate the diversity of franchise models.
Since the Bill is targeted at holding company/subsidiary and franchisor/franchisee arrangements, the Committee felt it appropriate to recommend that the Bill be amended to guide the Ombudsman towards limiting the use of these additional powers to investigations of those kind of arrangements.
It is not known at this stage whether the government will make the suggested amendments.
If the recommended amendments are made, the ramifications could be significant for franchisors in particular.
If Recommendation 1 is adopted, it may become possible for franchisors to avoid liability under the Bill by simply disclaiming any form of influence or control over workplace relations matters. The first such model to be the subject of litigation would be an important lesson for all franchisors.
Recommendation 2 does not necessarily advise a change to the Bill itself, but alerts the government to the prospect of further reform. Whether the government chooses to do this, or how it chooses to affect it, remains to be seen.
As for Recommendation 3, the Committee did not go so far as to expressly suggest a limitation on the situations in which the Ombudsman may use its additional powers, so it remains to be seen how the government treats this recommendation, if at all.
Given the Committee’s recommendation that the Bill be passed subject to the above changes, all businesses should watch this space.
The National Retail Association is closely monitoring the progression of this Bill and will continue to advocate for members’ interests.
We are currently working with retailers likely to be affected by this Bill, helping them to analyse and prepare for the substantial implications and changes facing their business. If you would like to discuss your situation, please contact us at [email protected] or call 1800 RETAIL (1800 738 245).