The Protecting Vulnerable Workers Act extends the liability of franchisors for employee entitlements by holding certain franchisors and holding companies responsible for underpayments to workers by businesses within their network. This can occur, for example, where a franchisor has a significant degree of influence or control over the franchisee’s affairs and the franchisor (or one of its officers) knew, or could reasonably be expected to have known, that underpayment of wages by a franchisee would occur or was likely to occur.

This responsibility can be discharged by the franchisor taking reasonable steps to prevent the underpayment of wages arising within their network.

It’s been over three months since the new laws came into force, so here’s a refresher on what franchisors should consider doing to help protect workers and ensure compliance within their networks:

Set clear expectations

The first step you should take is to make it clear to your franchisees that you expect them to comply with workplace laws. Best practice would be to state this in your franchise agreement and to set out consequences if franchisees fail to comply. If this isn’t possible, or cannot be achieved in the short term, then you need to communicate your expectations to them in another manner that is clear and unambiguous.  We recommend you do this right away.

Support compliance

The second step you should take is to support your franchisees to comply by providing information and support suitable for both their capability and that of the workforce. Vulnerable workers, such as young workers or migrant workers, are less likely to be aware of their rights, or raise concerns in the workplace – a prudent business would provide more support to franchisees if this is the nature of their workforce. Similarly, more support may be required for franchisees with limited business experience.

A practical and easy way to assist franchisees is to direct them to the Fair Work Ombudsman’s free resources including pay and conditions calculators, online training and employment templates at Ask them to sign up to the FWO’s MyAccount, where they can interact with our advisers and save information relevant to their operations.

Another option is arranging corporate memberships with an industry association or engaging a professional adviser. This will provide franchisees with access to reliable advice. Importantly, we find members of employer organisations are more likely to comply with laws.


Finally, you should check your expectations are being met. One easy and cost effective way to do this is to set up an employee hotline or email address where workers can raise any concerns directly with you. This enables you to hear about and get to the bottom of any issues quickly and can also provide valuable intelligence about where problems may be forming. Another way to stay on top of what is happening within your network is to regularly audit employee records. Effective audit programs involve both paper-based audits and dicussions with employees to confirm records are accurate.

The diversity in the nature of franchise systems means the steps you choose to take might be different to those taken by another franchisor. You need to determine what works for your business. Following these three steps adapted to the nature of your business, your franchisees and the workforce, will help to ensure a compliant network.

For further guidance see information for Franchisors here.


About Fair Work Ombudsman

The Fair Work Ombudsman (FWO) is an independent statutory office responsible for promoting harmonious, productive and cooperative workplace relations and for ensuring compliance with Australia’s workplace laws. The FWO’s free services provide employers and employees with information about fair work practices, rights and obligations. A cornerstone of the FWO’s approach is work with key stakeholders to build strong, effective, long term relationships promoting compliant workplaces.

About Natalie James

Natalie James was appointed to the position of Fair Work Ombudsman by the Governor-General on 15 July 2013.
Under the Fair Work Act 2009 Natalie is responsible for:
  • promoting harmonious, productive and cooperative workplace relations and
  • ensuring compliance with Commonwealth workplace laws.
Natalie has a 20 year career working for the Australian Government in a range of roles in regulation, program management and policy development in areas of employment, including indigenous employment, early childhood and workplace relations.
This included 10 years working in government in workplace relations, culminating in her appointment as Chief Counsel, workplace relations in the Department of Employment and Workplace Relations. Over this period worked with Governments to develop workplace relations legislation, including the current Fair Work laws and the Work Choices amendments.
Natalie grew up and went to school in Townsville. She graduated from James Cook University with an Arts Law degree. She began to develop a curiosity about workplace relations while working in retail and fast food while studying. When she was accepted as a graduate in Canberra at the then Department of Employment, Education, Science and Technology in 1996, she immediately enrolled in a Masters of Industrial Law at the Australian National University in Canberra to satisfy that curiosity. National University in Canberra to satisfy that curiosity. She has continued to nd things to be curious about in the eld of workplace relations ever since.