Media Release | SDA slams ‘deficient’ franchising code before Senate Inquiry

Media Release 8 June 2018

The SDA, the Union for workers in retail and fast food will today appear with employment lawyers Maurice Blackburn to give evidence before a Federal Senate Inquiry In Brisbane slamming the Franchising Code of Conduct as ‘deficient and ineffective’.

SDA National Secretary Gerard Dwyer said that among a myriad of deficiencies the Franchising Code of Conduct makes no attempt to ensure that workers are treated fairly.

“The current Code makes absolutely no attempt to ensure that franchisors and franchisees abide by workplace laws.”

“It does not require the franchisor to ensure that franchisees provide proper wages and working conditions to those employed in franchise operations.”

“It does not require a franchisor to abide by the law in regard to those who are employed by the franchisee, and there is nothing which requires an employer to be aware of their legal obligations toward their employees.”

“As a result, we have seen appalling examples of systemic wage theft and exploitation of thousands of workers by major companies such as 7 Eleven, Caltex and Subway.”

Mr Dwyer said that migrant workers were particularly vulnerable and poorly served by the Code.

“The Code does not address the issue of the interaction of employment and immigration law and does not address situations where overseas workers are subject to exploitation and intimidation.”

“Overseas workers still face fears and threats of being reported to immigration and deported.”

“Proceedings to recover unpaid wages in the current system are complex, time consuming and costly.”

“Those who do complain and seek to assert their rights are sometimes still being intimidated or even bashed.”

Mr Dwyer said that additionally, certain franchise models were structured in a manner that was financially unsustainable for franchisees and that this was not addressed by the Code.

“Its clear that many individuals enter into franchise arrangements without having a clear understanding of all that’s required.”

“Once all the costs have been met, the actual return to the franchise holder is often minimal or even non-existent.”

“It is virtually impossible for many franchise holders to operate a successful business without ‘cutting corners’ such as engaging in wage theft.”

When fraudulent activity was undertaken Mr Dwyer also said that the Code failed to compel franchisors to make franchisees legally responsible.

“There is presently no effective disincentive for an employer who chooses to exploit workers and deny them minimum wages and conditions.”

“The fact that 7 Eleven can choose to ‘self-manage’ the process of underpayment is fanciful and does little to dissuade other exploitative employers from such behaviours.”

Mr Dwyer said that to begin addressing these systemic problems a range of measures had to be put in place, the primary one being holding franchisors to account.

“Franchisors should be equally liable for any breech with individual franchisees.”

“Liability for breaches of the Fair Work Act by franchisees should extend to the franchisor”

“In the face of wage theft, exploitation and fraudulent behaviour franchisors should not be allowed to look the other way and say, “not my problem.”

“But equally to provide balance, franchisors need to be able to cancel a franchise agreement where an individual franchisee has been found guilty of deliberate and systemic wage theft or fraudulent behaviour.”

“It is also critical that franchisees are given all the relevant information regarding finance, including all relevant and prospective charges which may be levied by the franchisor.”

“Trade Unions must be afforded proper legislative powers to ensure effective compliance of the industrial relations system.”

“In our view the Workplace Relations Act needs to be further strengthened in relation to franchise operations.”

“Those who are guilty of wage fraud should face severe penalties including in serious cases, gaol and/or disqualification as company directors.”

“Similar strict penalties should apply to franchisors who do not fulfil their obligations.”

“All workers and their families are entitled to income sufficient for them to live decently with dignity.”

“The Franchising Code of Conduct must by reformed to ensure that all parties from the franchisee to the franchisor are compelled to stamp out wage theft and exploitation.”

Read the SDA’s full submission the Senate Inquiry in the Operation and Effectiveness of the Franchising Code of Conduct here

Media contact: Darren Rodrigo 0414783405


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