28 Feb HR LAW NEWSLETTER – FEBRUARY 2023

Welcome to the February 2023 HR Law Newsletter. 

This month, we discuss upcoming legislative changes regarding addressing workplace gender inequality and other proposed IR changes.  We also discuss franchisor obligations and a recent case, which outlines how a franchisor may be held legally liable for their franchisees’ actions.

Sexual Harassment and Discrimination Changes

From 6 March 2023, there will be a positive duty on employers to eliminate sexual harassment in the workplace. This means that employers will be required, rather than simply responding to conduct that has already occurred, to proactively taking steps to prevent that conduct from occurring in the first place.

There is also now a positive duty to eliminate harassment and discrimination on the ground of a person’s sex and eliminate conduct that subjects a person to a hostile workplace environment on the ground of sex.  Further, where an employee brings a complaint proceeding or makes an assertion or allegation in relation to these types of conduct, an employer must eliminate acts of victimisation.  Importantly, acts of victimisation can now form the basis of both a civil action for unlawful discrimination as well as a criminal offence under the Sex Discrimination Act 1984 (Cth).

If an employer does not take reasonable steps to prevent an employee from sexually harassing another employee in the workplace, they can be held vicariously liable.

Workplace Gender Equality

This month, the Albanese Government introduced the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill (“the Bill”).The Bill was proposed after the 2021 Review of the Workplace Gender Equality Act 2012 (“the Act”) concluded that the gender pay gap in Australia was not closing at a fast enough rate.

The Act applies to private and Commonwealth companies or entities who employ 100 or more employees.  Whilst the Act already requires relevant employers to promote and improve gender equality in the workplace, including through the lodgement of annual reports containing information relating to six gender equality indicators, the Bill aims to improve pay gap transparency and accountability. 

Notably, the proposed provisions will require the Workplace Gender Equality Agency (“Agency”) to publish gender pay gap information of relevant employers for each reporting period, for the purpose of showing each employer’s performance and progress in achieving gender equality in relation to remuneration for the employer’s workforce. 

CEOs will also be required to cause certain reports, namely the Executive Summary and Industry Benchmark Report, to be given to all members of their governing body.  The Industry Benchmark Report is a report given by the Agency to the relevant employer that compares the employer’s gender pay performance to similar relevant employers in respect of the reporting period.

The Bill is currently before the Senate.  HR Law will keep you updated on the passage of the Bill.

To access the Bill, click here.

Further IR Legislation

The Albanese Government will soon introduce further legislation to include superannuation payments in the National Employment Standards (NES), clarifying coverage of temporary migrant workers and extend paid parental leave.

In his address to the National Press Club, Workplace Relations Minister Tony Burke said the government would also start consulting with employers and unions on more “controversial” issues, which are to be included in separate legislation in the second half of this year.

Mr Burke told the National Press Club that those issues included Labor’s “Same Job, Same Pay”, which aims to ensure that workers employed through a labour hire company will not receive less pay than workers employed directly.  Other issues include defining casual workers, the coverage of gig economy workers in “employee-like” conditions, introducing jail terms for the worst cases of wage theft, and “having a low-cost jurisdiction at the Fair Work Commission to deal with unfair contract disputes for independent contractors”.  The legislation will also feature safety principles and minimum standards for long-haul drivers, stronger protections against discrimination, and further action on the dangers of silica dust.

Mr Burke said while the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, which received royal assent on 6 December 2022, “was about taking significant steps on job security and getting wages moving“, the forthcoming legislation will be about “closing loopholes that can undercut the principles that we put through last year“.

HR Law will keep you updated on these proposed significant changes.  

To read Tony Burke MP’s address to the National Press Club, click here.

Franchisors – What are your obligations?

Under section 558B of the Fair Work Act 2009 (Cth) (“the FW Act”), a responsible franchisor entity can be held legally responsible if a franchisee contravenes certain provisions of the FW Act, including provisions regarding entitlements under the NES, modern awards and agreements, and obligations regarding rules for methods and frequency of payment, pay slips, record keeping, and sham contracting.

An entity will be a “responsible franchisor entity” under the FW Act if:

• the entity is a franchise;

• the franchisee’s business is substantially or materially associated with intellectual property (for example, the trademark) relating to the franchise; and

• the franchisor has a significant degree of influence or control over the franchisee’s affairs.

A responsible franchisor will be liable for their franchisee’s contraventions of the FW Act if they (or an officer of the franchisor) knew, or could reasonably be expected to have known, that a relevant contravention would happen, or was likely to happen, and the franchisor did not take reasonable steps to prevent it from occurring.

Responsible franchisors can be subject to enforcement action for breaches of their extended liability provisions in the FW Act and can be subject to court proceedings.  If a franchisor is found legally responsible for a franchisee’s conduct, a court can make a range of orders, including that the franchisor pay compensation to the franchisee’s employees or that the franchisor pay penalties.  The maximum penalty a court may impose is $16,500.00 per breach for an individual and $82,500.00 per breach for a company.

THIS MONTH’S CASE BRIEF

This month’s case aptly focuses on franchisor liability for franchisee contraventions of the provisions of the FW Act.  For the first time, the Fair Work Ombudsman (“FWO”) has commenced legal action against a franchisor in Fair Work Ombudsman v 85 Degrees Coffee Australia Pty Ltd (ACN 108 821 521), for alleged underpayment of workers by franchisees.

Facing the Federal Court is 85 Degrees Coffee Australia Pty Ltd (“85 Degrees”), a franchisor that operates café outlets across NSW and the ACT.  The FWO is alleging that 85 Degrees is a “responsible franchisor entity” under the FW Act and is therefore liable for alleged non-compliance by eight of its franchisee-operated outlets in Sydney in 2019.

The alleged non-compliance affected 20 employees, including a number of young workers and visa holders. It is alleged that between 1 January 2019 to 31 December 2019, some of the affected workers were underpaid minimum rates, overtime entitlements, penalty rates for weekend, public holiday and evening work, casual loadings and a laundry allowance under the General Retail Award 2010.  Some of the affected workers also did not receive annual leave entitlements under the NES. Further, the FWO also alleges that pay frequency laws were breached and that one worker was not paid a penalty rate payable when workers do not receive an adequate break between shifts.

The FWO alleges that while 85 Degrees did not directly underpay workers, it is legally liable for the alleged underpayment contraventions because it should reasonably have known its franchisees would underpay the workers or commit similar contraventions.  The FWO also alleges that 85 Degrees is legally liable for their franchisees’ record-keeping and pay slip contraventions.

In 2015, 85 Degrees was subject to an enforceable undertaking with the FWO to address underpayment and record-keeping contraventions.  Accordingly, the FWO alleges that this knowledge of compliance issues, subsequent audits, its knowledge of its franchisees’ financial circumstances, and its knowledge that the franchisees had limited English and limited awareness of workplace laws was relevant to its liability. 

The Fair Work Ombudsman alleges that 85 Degrees is liable for each of the alleged franchisee contraventions. The individual franchisees have back-paid workers in full as a result of the FWO’s audit and the FWO has not taken court action against the franchisees. The Fair Work Ombudsman is seeking penalties against 85 Degrees in relation to multiple contraventions of the FW Act, with the company facing penalties of up to $63,000.00 per contravention.

The first directions hearing in the Federal Court in Sydney is yet to be scheduled.

Key Takeaways

This case highlights that franchisors could be held accountable if they do not take action to prevent breaches in their networks.  To promote compliance with workplace laws in your franchise network, contact HR Law.  Our team can provide training to your franchisees to ensure they meet their obligations at law, including with regard to record keeping and wage compliance.

HR LAW ANNOUNCEMENTS

2023 Doyle’s Guide

Jill Hignett, Managing Partner of HR Law and Accredited Specialist – Workplace Relations, has been listed in the 2023 Doyle’s Guide for Queensland Employer & WHS Law rankings as a recommended employment lawyer (Employer Representation). This exclusive list is for solicitors practising within the areas of employment and industrial relations law in Queensland whose practice has strong employer representation focus and are identified by Queensland employment law solicitors for their expertise and abilities in these areas.  Jill has extensive experience and knowledge in all areas of workplace law and assists numerous large, medium and small employer clients at State, Federal and international levels. 

HR Law has also been recognised in the 2023 Doyle’s Guide as a recommended employer-focused Queensland Employment Law Firm practising within the areas of employment and industrial relations matters whose practice has strong employer representation focus.  HR Law provides strategic, practical and commercially realistic workplace relations legal advice to employers.

The focus in this specialist field of the law enables Jill and the HR Law team to offer clients cutting edge strategic advice based upon the teams’ extensive experience and knowledge. Get in touch with Jill and HR Law for all your workplace relations needs. 

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