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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees)
Bill 2015
EXPLANATORY MEMORANDUM
and
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Circulated by authority of
Adam Bandt MP
Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees)
Bill 2015
OUTLINE
The purpose of this bill is to remedy and help prevent the underpayment of employees in
franchisee run businesses by holding the franchisor or head office liable for the payment of
unpaid wages.
In recent times there have been widespread incidents of workers being systematically
underpaid within Australian franchises. The underpayment and exploitation of employees
represents a serious breach of the rights of these workers. This amendment to the Fair
Work Act 2009 would ensure that instead of leaving it to vulnerable workers to uphold the
law through expensive legal action, head offices would take more responsibility for
ensuring compliance with industrial laws in stores that carry their name.
The bill amends the Fair Work Act 2009 by inserting a new Part (6-4AA) into the Act which
provides for employees employed by a franchisee to recover unpaid remuneration from the
franchisor or head office entity.
FINANCIAL IMPACT
This bill would have no direct financial impact.
NOTES ON CLAUSES
Clause 1 - Short Title
This is a formal provision specifying the short title.
Clause 2 - Commencement
The Bill's provisions are to commence on the day after it receives the Royal Assent.
Clause 3 - Schedule (s)
This clause provides that an Act that is specified in the Schedule is amended or repealed
as set out in that Schedule, and any other item in a Schedule operates according to its
terms.
Schedule 1 - Amendments to the Fair Work Act 2009
Item 1
Inserts the following terms into the dictionary:
- apparent franchisor entity
- franchisee employee
- franchisee employer
- franchise-related work
- franchisor entity
Item 2
Amends the definition of unpaid amount in section 12 of the Act to include franchise
related work performed by a franchisee employee.
Item 3
Inserts an overview of new Part 6-4AA - the recovery of unpaid amounts for franchisee
employees into subsection 9(5A) of the Fair Work Act 2009.
Item 4
Amends subsection 789BA(1) to provide that provisions relating to TCF contract
outworkers do not apply to the new Part 6-4AA.
Item 5
Inserts a new Part 6-4AA - Recovery of unpaid amounts for franchisee employees.
Division 1 gives an introduction to Part 6-4AA.
Section 789GA gives a guide to Part 6-4AA which provides for employees employed by a
franchisee (or by a related body corporate of a franchisee) to recover unpaid remuneration
from the franchisor (or from a related body corporate of the franchisor).
Section 789GB defines an employee as a national system employee and an employer as a
national system employer.
Division 2 sets out the process for the recovery of unpaid amounts for franchisee
employees.
Section 789GC outlines when this division applies for franchisee employees not paid for
work in certain circumstances.
This division applies to a franchisee employee who performs franchise related work for the
franchisee employer where the franchisee employer does not pay an amount that is
payable under either a contract, the Fair Work Act 2009, another law of the
Commonwealth or a State or Territory industrial law.
This division applies to unpaid amounts including unpaid remuneration or commission, an
amount due in respect to leave, unpaid superannuation contributions, unpaid
reimbursements for expenses incurred by the employee.
This division defines a franchisor entity as either a franchisor under the franchise or a
related body corporate of the franchisor. The franchisor entity can also be a constitutional
corporation, the Commonwealth, a Commonwealth authority or a body corporate
incorporated in a Territory.
Section 789GD outlines the liability of the franchisor entity for the unpaid amount.
Each franchisor entity is liable to pay the unpaid amount. In the situation where there are 2
or more franchisor entities, those entities are jointly liable for the payment of the unpaid
amount. Subject to subsection 789GG(2) this section does not affect the liability of the
franchisee employer to pay the unpaid amount.
Section 789GE sets out the process for an employee to demand payment from an
apparent franchisor.
The franchisee employee, or person acting on their behalf, may give the apparent
franchisor entity a written demand for payment for the unpaid amount. The demand must
specify the amount, identify the franchisee employer and include particulars of the
franchise-related work for which the amount is payable and state that if payment is not
received by a particular date (no less than 14 days after the demand is given the entity)
that proceedings may be commenced against the entity.
Section 789GF outlines the process for an employee or person acting on their behalf to
seek a court order for the franchisor entity to pay amount demanded.
If an apparent franchisor has been given a demand for payment of a specified amount and
that payment has not been received in full by the date specified the applicant may
commence proceedings for a court order compelling the apparent franchisor entity or the
franchisor entity to pay the amount.
Court proceedings may be initiated by the franchisee employee or an organisation entitled
to represent the industrial interests of the employee or an inspector and may be
commenced in the Federal Court, Federal Circuit Court or an eligible State or Territory
Court.
The court may make an order for the franchisor entity to pay the specified amount to the
employee unless the franchisor entity satisfies the court that it is not liable under section
789GD. In the event that the franchisor entity satisfies the court that the specified amount
is greater than the entity's liability under 789GD the court must order the entity to pay only
the amount the entity is deemed liable for.
It is to be noted that the Court has power to order in respect of a franchisor entity, whether
or not that entity has been correctly identified as the apparent franchisor entity. This is to
ensure that a claim by an employee is not unsuccessful simply because the employee, in
naming the apparent franchisor entity in the initial demand for payment, has failed to
correctly identify the actual franchisor entity.
The court must, on application, include interest in the amount the entity is ordered to pay,
unless there is good cause to show otherwise. Interest must be calculated by taking into
account the time elapsed between the day when the unpaid amount was due for payment
and the day that the order is made.
Proceedings cannot be commenced under this section more than 6 years after the due
date of the payment of the unpaid amount.
Section 789GG sets out the effect of payment by the entity in discharging liability and the
entity's right to recover the unpaid amount from the franchisee employer.
Payment of the unpaid amount discharges the franchisee employer's liability to the extent
of the payment but does not affect the right of the franchisor entity to recover the amount
from the employer.
The entity may recover from the franchisee employer the amount paid by the entity to the
employee including any interest paid. This amount may be recovered by the entity by
offsetting it against any amount that the entity owes the franchisee employer or by court
action in the Federal Court, Federal Circuit Court or an eligible State or Territory court.
The court must, on application, include interest in the amount the franchisee employer is
ordered to pay, unless there is good cause to show otherwise. Interest must be calculated
by taking into account the time elapsed between the day when the unpaid amount was
paid by the entity and the day that the order is made.
Proceedings cannot be commenced under this section more than 6 years after the due
date of the payment of the unpaid amount.
Section 789GH notes that nothing in this division limits any other liability or right in respect
to the entitlement of the franchisee employee to be paid the unpaid amount.
Item 6
Inserts an application provision for new Part 6-4AA.
The application provision provides that Part 6-4AA applies only to new franchise
agreements entered into after the commencement of the amendments.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees)
Bill 2015
Overview of the bill
The purpose of this bill is to remedy and help prevent the underpayment of employees in
franchisee run businesses by holding the franchisor or head office liable for the payment of
unpaid wages.
In recent times there have been widespread incidents of workers being systematically
underpaid within Australian franchises. The underpayment and exploitation of employees
represents a serious breach of the rights of these workers. This amendment to the Fair
Work Act 2009 would ensure that instead of leaving it to vulnerable workers to uphold the
law through expensive legal action, head offices would take more responsibility for
ensuring compliance with industrial laws in stores that carry their name.
The bill amends the Fair Work Act 2009 by inserting a new Part (6-4AA) into the Act which
provides for employees employed by a franchisee to recover unpaid remuneration from the
franchisor or head office entity.
Human rights implications
This bill enhances human rights by ensuring that workers are paid fair wages in
compliance with Article 7 of the International Convention on Economic, Social and Cultural
Rights.
Conclusion
This bill is compatible with human rights because it upholds the rights of workers to receive
fair and equal remuneration.
Adam Bandt MP