Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

by leave—I move amendments (1) to (3) on sheet 1, version 2, together:

(1) Schedule 1, item 17, page 9 (lines 11 to 16), omit subsection 558A(2), substitute:

(2) A person is a responsible franchisor entity for a franchisee entity of a franchise if:

(a) the person is a franchisor (including a subfranchisor) in relation to the franchise; or

(b) the person:

  (i) is a related body corporate of a franchisor (including a subfranchisor) in relation to the franchise; and

  (ii) the person has a significant degree of influence or control over the franchisor (or subfranchisor).

(3) Schedule 1, page 13 (after line 29), after part 2, insert:

Part 2A—Recovery of unpaid amounts for franchisee employees

Fair Work Act 2009

17A Section 12

Insert:

apparent responsible franchisor entity: see subsection 789GE(2).

franchisee employee: see subsection 789GC(1).

franchisee employer: see subsection 789GC(1).

franchise -related work: see subsection 789GC(1).

17B Section 12 (definition of unpaid amount )

Repeal the definition, substitute:

unpaid amount:

(a) in relation to TCF work performed by a TCF outworker: see subsections 789CA(1) and (4); and

(b) in relation to franchise-related work performed by a franchisee employee: see subsection 789GC(1).

17C After subsection 9(5B)

Insert:

(5C) Part 6-4C provides for the recovery of unpaid amounts for franchisee employees.

17D After paragraph 789BA(1 ) ( f)

Insert:

(fa) Part 6-4C (recovery of unpaid amounts for franchisee employees);

17E After Part 6 -4B

Insert:

Part 6 -4C—Recovery of unpaid amounts for franchisee employees

Division 1—Introduction

789GA Guide to this Part

This part provides for employees employed by a franchisee entity to recover unpaid remuneration from the responsible franchisor entity for the franchisee entity.

789GB Meanings of employee and employer

In this part, employee means a national system employee, and employer means a national system employer.

Division 2—Recovery of unpaid amounts for franchisee employees

789GC When this Division applies

Franchisee employees not paid for work in certain circumstances

(1) This division applies if:

(a) a franchisee entity is the employer (the franchisee employer) of an employee (the franchisee employee); and

(b) the franchisee employee performs work (franchise-related work) for the franchisee employer for the purposes of business activities carried on by the employer under the franchise; and

(c) the franchisee employer does not pay an amount (the unpaid amount) that is payable, in relation to the franchise-related work, by the employer:

  (i) to the franchisee employee; or

  (ii) to another person, for the benefit of the franchisee employee;

on or before the day when the amount is due for payment; and

(d) the unpaid amount is payable under:

  (i) a contract; or

  (ii) this act, or an instrument made under or in accordance with this Act; or

  (iii) another law of the Commonwealth; or

  (iv) a transitional instrument as continued in existence by schedule 3 to the Transitional Act; or

  (v) a state or territory industrial law, or a state industrial instrument.

(2) Without limiting paragraph (1) (c), the unpaid amount may (subject to paragraph (1) (d)) be an amount of any of the following kinds that relates to (or is attributable to) the franchise-related work:

(a) an amount payable by way of remuneration or commission;

(b) an amount payable in respect of leave;

(c) an amount payable by way of contributions to a superannuation fund;

(d) an amount payable by way of reimbursement for expenses incurred.

789GD Liability of responsible franchisor entity for unpaid amount

(1) Each responsible franchisor entity for the franchisee employer is liable to pay the unpaid amount.

(2) If there are 2 or more responsible franchisor entities for the franchisee employer, those entities are jointly and severally liable for the payment of the unpaid amount.

(3) Subject to subsection 789GG(2), this section does not affect the liability of the franchisee employer to pay the unpaid amount.

789GE Demand for payment from an apparent responsible franchisor entity

(1) The franchisee employee, or a person acting on behalf of the franchisee employee, may give an apparent responsible franchisor entity for the franchisee employer a written demand for payment of the amount that the franchisee employee reasonably believes the entity is liable for under section 789GD in relation to the franchise-related work.

(2) An entity is an apparent responsible franchisor entity for the franchisee employer if the franchisee employee reasonably believes that the entity is a responsible franchisor entity for the franchisee employer.

(3) The demand must:

(a) specify the amount, and identify the franchisee employer; and

(b) include particulars of the franchise-related work to which the amount relates, and why the amount is payable by the entity to which the demand is given; and

(c) state that if the specified amount is not paid by a specified time, proceedings may be commenced against the entity under section 789GF.

(4) The time specified for the purpose of paragraph (3) (c) must not be less than 14 days after the demand is given to the entity.

789GF Court order for entity to pay amount demanded

(1) If:

(a) in accordance with section 789GE, an apparent responsible franchisor entity for the franchisee employer has been given a demand for payment of a specified amount; and

(b) the amount has not been paid in full by the time specified in the demand;

a person or organisation specified in subsection (2) (the applicant) may commence proceedings for an order requiring the apparent responsible franchisor entity or the responsible franchisor entity for the franchisee employer to pay the specified amount.

(2) The proceedings may be commenced:

(a) by the franchisee employee; or

(b) on the franchisee employee's behalf, by:

  (i) an organisation that is entitled to represent the industrial interests of the franchisee employee; or

  (ii) an inspector.

(3) The proceedings may be commenced in:

(a) the Federal Court; or

(b) the Federal Circuit Court; or

(c) an eligible state or territory court.

(4) Subject only to subsections (5) and (6), the court may make an order requiring a responsible franchisor entity for the franchisee employer to pay, to the franchisee employee or to another person on the employee's behalf, the specified amount (or so much of that amount as the applicant alleges is still owing).

(5) The court must not make an order under subsection (4) in relation to a responsible franchisor entity for the franchisee employer if the entity satisfies the court that the entity is not liable under section 789GD to pay any of the specified amount.

(6) If a responsible franchisor entity for the franchisee employer satisfies the court that the amount of the entity's liability under section 789GD is less than the specified amount (or is less than so much of that amount as the applicant alleges is still owing), the court must not make an order under subsection (4) requiring the entity to pay more than that lesser amount.

(7) In making the order, the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.

(8) Without limiting subsection (7), in determining the amount of interest, the court must take into account the period between the day when the unpaid amount was due for payment by the franchisee employer and the day when the order is made.

(9) Proceedings cannot be commenced under this section more than 6 years after the time when the unpaid amount became due for payment by the franchisee employer.

789GG Effect of payment by entity (including entity ' s right to recover from franchisee employer)

(1) This section applies if an entity pays an amount in discharge of a liability of the entity under section 789GD, or pursuant to an order under section 789GF.

(2) The payment discharges the liability of the franchisee employer for the unpaid amount, to the extent of the payment. This does not affect any right that the entity has to recover an equivalent amount from the franchisee employer (under this section or otherwise) or from another person, or to be otherwise indemnified in relation to the making of the payment.

(3) The entity may, in accordance with this section, recover from the franchisee employer an amount (the recoverable amount) equal to the sum of:

(a) the amount paid by the entity as mentioned in subsection (1); and

(b) any interest paid by the entity in relation to that amount pursuant to an order under section 789GF.

(4) The entity may recover the recoverable amount:

(a) by offsetting it against any amount that the entity owes to the franchisee employer; or

(b) by action against the franchisee employer under subsection (5).

(5) The entity may commence proceedings against the franchisee employer for payment to the entity of the recoverable amount. The proceedings may be commenced in:

(a) the Federal Court; or

(b) the Federal Circuit Court; or

(c) an eligible state or territory court.

(6) The court may make an order requiring the franchisee employer to pay the entity the recoverable amount (or so much of it as is still owing) if the court is satisfied that:

(a) this section applies as mentioned in subsection (1); and

(b) the entity has not otherwise recovered the recoverable amount in full from the franchisee employer.

(7) In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.

(8) Without limiting subsection (7), in determining the amount of interest, the court must take into account the period between the day when the recoverable amount was paid by the entity and the day when the order is made.

(9) Proceedings cannot be commenced under this section more than 6 years after the time when the entity paid the recoverable amount.

789GH Division does not limit other liabilities or rights

Nothing in this division limits any other liability or right in respect of the entitlement of the franchisee employee to the unpaid amount (or to have the unpaid amount paid to another person for the employee's benefit).

(3) Schedule 1, page 31 (after line 25), after item 19, insert:

19A Application of the amendments—recovery of unpaid amounts for franchisee employees

Part 6-4C, as inserted by Schedule 1 to the amending Act, applies in relation to an amount that is payable by a franchisee employer if the franchise is entered into on or after the commencement of this part.

This is a very important set of amendments that closes a huge loophole in this bill. It is a set of amendments that I would hope the opposition will support and that I hope that the government, on reflection, will support as well.

What has become crystal clear as we have looked at the exploitation at 7-Eleven is that the way the exploitation in the system works is this: the head office sits at the top and controls pretty much everything that the franchisees do. It is why when you walk into one 7-Eleven shop it looks pretty much like every other 7-Eleven shop. The head office controls how stock is displayed, it controls the signage and, what we found out through the course of the inquiry, it also controls the payroll records and gives directions about rostering and the like.

What we know is that that is the way the franchise system operates. The head office, the head franchisor, wants all the franchises to look the same because that then builds the business. Then, when they want to have specials and the like, they often have—as we found out in the case of Domino's Pizza—significant direction. They can tell the franchisee how much they are going to sell a particular pizza for. They can dictate what kinds of posters go up in a window and what the shop is meant to look like. In short, the head office makes its money by controlling what happens at the store level.

Now, the one area that they turn a blind eye to is how much the workers at that store actually get paid. So they are happy to control everything else, but what we found out is that they do not then take that the next step and say, 'And we also want to control this and make sure you are paying your workers properly.' In fact, in the 7-Eleven incident we found out that it was even worse than that; they were complicit in it. It was the payroll system of the head office that was effectively being used to facilitate all these underpayments. So the head office was completely implicated in that.

What we need to do, if this bill is to have any teeth at all, is to make the head office take some responsibility, not only for the cleanliness of the store, how the stock is displayed or whether the chewing gum is in the right place but also whether the workers are being paid correctly. What this amendment will do is to close the loophole that the government has allowed in its legislation where a head office can get out of any responsibility for what is happening under its name simply by saying, 'Oh well, we couldn't reasonably have known about it.' The government has given the head offices a big out, in the legislation. If a head office, for example, gets the franchisee to sign up to a contract, to promise that they are doing the right thing, to say all the right words and to put all the right words down on paper, then when their poor old employee turns around and finds out that they have been underpaid and done over, and they come along and they say, 'Oh, the government has passed a protecting vulnerable workers act; I've got the rights to go to the head office, complain and get some recompense,' they will front up to the head office and potentially bring a legal case, only for the head office to then rely on the words of the legislation and say, 'Well, we couldn't reasonably have known that was what was going on in our name.'

Those words and the lack of responsibility up the chain will allow the 7-Eleven head offices of the future in the future scandals to get off the hook, potentially. Because it is ambiguous, we need to fix it up. What we also need is to make sure that the vulnerable worker—and we are dealing with vulnerable workers here; that is the point that the government is making—is not forced to go and have the argument about what the head office could or could not reasonably have known. How is someone who is getting paid a few dollars an hour in a position to litigate about what was going on in the boardrooms of 7-Eleven or elsewhere? They are just not going to be able to do it.

This puts in place a very, very simple, straightforward process that ought to give effect to what the government is saying is the intention behind the bill. Under this process, the employee who feels that they have been underpaid will be able to go to head office and make a claim. If it turns out, according to law, that they have been underpaid, then the head office pays them the difference. A 7-Eleven head office would have paid the people directly, as they said they would do when the scandal was brought to light. The head office can then turn around and claim the money back from the franchisee, but it then becomes a matter for them, and the worker is not left in the lurch. The worker is not left having to prove, as they may have to under this bill, who knew what and whether this was part of some overall coordination or not. No, if you work and get underpaid in a 7-Eleven store, and you do not get justice from your immediate employer, you can go to head office. Head office is obliged to pay you if the claim is proved legally, and then head office can turn around and recoup it.

This will do two things to give effect to the intent of this bill. The first thing it will do is allow vulnerable workers to actually get some justice. This process is not asking for the employees to get more than what they are entitled to. They will only get their legal entitlement out of this, but they will be able to get it. They will be able to get it because it is the head office—as the government has said in introducing this bill—that bears some responsibility. They will not be able to use the loopholes in this bill to get out of it. Head office will have to front up and then turn around and claim it from their franchisees.

The second thing that this will do is to minimise future exploitation, or the opportunities for future exploitation, because head office will now have an interest in not only checking whether the chewing gum is straight on the shelf and not only checking whether or not the posters are in the right place in the window but also in checking whether people are being paid properly. When—as we know they do, because we found out through the Senate inquiries—7-Eleven head office or any other head office of a franchise go in and do their regular store checks and audits, they will have an interest in auditing the wages books of the franchisees, because they will know that they might have to front up in the first instance and stump up the difference if there is an underpayment. It will create a culture of compliance. It will not leave the poor old vulnerable worker in the lurch, having to watch a fight take place between the franchisee and the head office.

What the amendments are also going to do is stamp out head offices of franchises putting small business franchisees in the invidious position Allan Fels found that 7-Eleven franchisees were in, where the only way they could make any money was by ripping off their workers. That is what Allan Fels said about the 7-Eleven arrangement. We are finding out that this arrangement is happening elsewhere, under names we walk past every day. What we are finding is that by using franchise contracts they are putting the subcontractor—the franchisee or small business—in the position sometimes where the only way the small business operator has any chance of making any money is by not complying with the law and not paying employees the appropriate amount.

These amendments would remove the incentive for that to happen. This does not just put the worker in a better position and ensure there is a culture of compliance; it puts the small business operator and the franchise in a better position because then they are not going to be put under these contracts where they are forced to underpay people's wages. That was a huge complaint that many 7-Eleven small business operators came forward with. They said, 'This is the only way we can make money because this is what we are being required to do.' This will remove any incentive for a head office to do that because they are going to have to stump up for some or all of the underpayment.

I can anticipate some of what the government might say about this. They might say, 'It's not the head office's responsibility.' If things are not the head office's responsibility, why are they introducing this bill at all? They are introducing this bill because people have been dragged, kicking and screaming, to recognise the injustice at the heart of this system at the moment that allows so many people to get underpaid. I say to the government: if you are going to do it, do it right. Do it in a way that will actually give some justice to these people. At the end of the day, I remind the government and the opposition that all this will do is allow a worker to get their legal minimum entitlement—no more, no less—and it will mean the operation itself has to argue amongst itself as to who is responsible.

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