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Are You Ready If The Labour Inspector Comes Knocking?

Are You Ready If The Labour Inspector Comes Knocking?

So tell me, could your business afford to come up with $200,000 to fix wage errors or pay fines? Well, that is what happened in a recent case investigated by the Labour Inspectorate.  With our predictions of joint employment becoming a reality (of franchisees and franchisors) in Australia, now is the time to act.

We have seen plenty of franchises across the ditch hitting the headlines for franchisees not complying with minimum employment standards. However, these cases seem to be coming to NZ with a number of NZ franchises (Caltex, Bottle-O and recently Gengy’s Mongolian BBQ Buffet) making headlines over the past month. These cases have had fines and arrears ranging from $80,000 to $200,000.

The most unexpected headline was the most recent case where Gengy’s Mongolian BBQ Buffet franchisor was ordered to pay $200,000 in fines and arrears. This marks the first time a Franchisor in NZ has been fined.  

Regardless of the circumstances for how the breaches came about, these stories end with the franchisee and/or the franchisor needing to come up with a significant amount of money to pay wage arrears and potential fines. Could your business afford to make a mistake like this?

What Do You Need To Do?

With joint employment taking effect in Australia, now is the time to act. Labour Inspectors are looking to Franchisors to take responsibility for their franchisees by ensuring that they are across employment law. 

Earlier in the year, in2HR presented with the Labour Inspectors in Auckland and Wellington on the importance of ensuring franchisees are operating on the right side of the law. Based on this presentation it is apparent that MBIE have an expectation that franchisors will take action.  

We work with franchises on a daily basis and from what we have seen, franchisees don't know what they don't know. A lot of franchisees have come from being an employee themselves and therefore don't have an understanding of their employer obligations. A lot of the time, it is not deliberate, however, that doesn't help when Labour Inspectors are knocking on their door.

Next Steps

We asked a couple of the franchisees that we work closely with what they could do with $125K. They all agreed that it would be shame to waste such a sum on wage arrears, as this kind of money would allow them to potentially invest into another site, or upgrade their current business.

So that you can use your funds to grow your business, you need to have the following in place for your franchise…

-        Training for your franchisees on Employer obligations and employer rights

-        Franchisees HR support for things that come up unexpectedly

-        The mechanisms to have visibility into what your franchisees are doing

in2HR specialise in working with franchises, so we will be able to help you and your franchisees get everything in line. Don’t hesitate to get in touch with us to see how we can safeguard your franchise,