Franchising report: investors must hold franchising companies accountable for widespread wage theft

Commenting on the release of the Senate inquiry report into The operation and effectiveness of the Franchising Code of Conduct, Dr Katie Hepworth, Director of Workers’ Rights at the Australasian Centre for Corporate Responsibility (ACCR), said:

“It is clear that the current regulatory processes governing franchising agreements are deeply flawed, and the consequences have been severe, for both the franchisees duped into unfair agreements and the workers employed by them.

“The inquiry heard many eerily similar stories of franchise employees being paid well below award rates, not being paid penalty rates, not being paid overtime, and not being paid superannuation correctly or at all.

“The responsibility for these breaches must lie with the franchisor. Franchising companies should follow Caltex’s lead, and take steps to reform the endemic, structural issues in their model which have led to widespread wage theft.

“Any legislation that seeks to criminalise wage theft must also recognise the responsibility for, and liability of, franchisors in setting the structural conditions that allow wage theft to flourish.

“In addition to the immediate impacts on workers, the consequences of wage theft will be felt well into the future. Over the next 18 months, ACCR will be engaging investors to hold franchising companies accountable for unsustainable and exploitative business models.

“The egregious examples of wage theft that have been exposed throughout the inquiry again highlight the failures of third party audits to uncover systematic underpayments and wage fraud. Greater trade union oversight of workplaces and conditions is necessary to ensure that workers’ are made aware of their rights and are able to raise concerns. Investors should forcefully engage companies to mitigate the long term financial and reputational risks that follow from the widespread and systemic issues that have been uncovered throughout the inquiry, and separately by the Fair Work Ombudsman in numerous investigations.”