Fair Work Ombudsman Natalie James says that in an environment of increasing scrutiny, it is crucial that franchise operations are proactive about ensuring they have systems in place to promote compliance in their networks.
The master franchisor of the Yogurberry frozen yoghurt chain in Australia has been penalised $146,000 over the exploitation of four workers at one of its Sydney outlets in a Federal Court judgment.
This is the first time the Fair Work Ombudsman has secured penalties against a master franchisor for being an accessory to the exploitative practices of one its associated companies
Significantly, almost half of the total penalties were imposed against companies in the Yogurberry Group for being accessories to the exploitation of the workers under the accessorial liability provisions in the Fair Work Act.
Justice Geoffrey Flick found that the head Australian company and master franchisor of the Yogurberry chain, YBF Australia Pty Ltd, was directly involved in establishing pay rates and other practices at the store – and that and the exploitation occurred despite prior warnings from the Fair Work Ombudsman.
The four exploited workers were paid as little as $8 an hour while working at a Yogurberry outlet at the World Square Shopping Centre in the Sydney CBD, leading to total underpayments of $17,827.
The workers were 4 Korean nationals who speak little English and were backpacking in Australia on 417 working holiday visas.
Ms James says the Court’s decision sends a strong signal to franchisors that they can be held accountable for exploitation in their networks, even if they use corporate structures to try to legally hold themselves at arms-length from practices in their outlets.
She said her office is committed to improving compliance in the hospitality industry and a three-year hospitality industry campaign has resulted in more than $582,000 being recovered for underpaid employees at take-away food outlets across Australia this year.
About the author: Craig McFadden is the founding director of Savvy HR. Craig's clear, practical counsel and ability to influence others into action and to rethink traditional HR practices with a business oriented lens, has gained him credibility with CEOs and executive leaders and he is frequently called on to serve as a strategic partner with the primary focus of defining, building and influencing the talent within leadership teams to drive business objectives.
