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WORKPLACE HEALTH AND SAFETY IN THE FRANCHISING INDUSTRY |
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Franchise group workplace safety and complying with
the new WHS Laws Recent changes to OH&S legislation have seen the
introduction of a national “harmonised” approach to Workplace Health &
Safety, released in January 2012. And the changes have major
implications for the franchising industry. Franchisors would be well
advised to address these changes proactively and quickly, but what do
Franchisors and Directors (officers) of Franchise groups need to do to
comply?
Now more than ever, Franchisors and Directors need to demonstrate due
diligence in workplace safety across their entire franchise network.
Officer of a PCBU
The Act acknowledges that while a PCBU may have a
primary duty to the workplace health and safety of their workers, WHS
initiatives and consequently compliance is administered by individuals.
Those individuals whose actions can influence compliance with WHS laws
and the culture within the PCBU are deemed to be officers and as such
the Act imposes a duty of due diligence on them. This duty requires that they take reasonable steps to create a safer workplace, that they allocate sufficient resources to workplace health and safety (including putting in place appropriate WHS policies, procedures and practices) and that they are accountable for their actions. Officers can be held personally liable for failing to meet their duties. |
Person
Conducting a Business or Undertaking
Essentially, the new WHS Act now places a primary
duty of care (among other specific duties and obligations), where
reasonably practicable, on any Person Conducting a Business or
Undertaking (PCBU). This is a deliberately broader definition than
“employer – employee” and is designed to take into account modern
working arrangements – contractors and franchisors included. A PCBU owes
this duty to workers engaged or caused to be engaged by the PCBU, or
whose activities are influenced or directed by the PCBU while at work –
or more broadly as “a person who carries out work in any capacity for a
person conducting a business or undertaking”. Specifically,
franchisors will owe this primary duty to franchisees by virtue of the
fact that they:
•
Supply
franchisees with an Operations Manual
•
Supply
franchisees with an OH&S manual
•
Allocate
work to franchisees;
•
Can
contractually require compliance with relevant legislation;
•
Can
contractually require franchisees do not bring the brand
•
Can impose
sanctions for non-compliance with the contract. On this basis, it can be argued that a franchisor is the PCBU of the franchisee. It should also be noted that a franchisee can be a PCBU in his or her own right also, and will owe primary duties to anyone considered to be their worker. You should also note that you cannot contract out of your duties. |
Penalties
Apart from the obvious motivation of ensuring that
all those to whom you owe a duty get home safely from work each night,
there are some very real and significant penalties incorporated in the
new Act, as indicated below. Three categories of penalties apply to breaches of the work health and safety duties:
Category 1
Category 2
Category 3 |
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Reasonably
Practicable
The new Act now requires a business owner to take
reasonably practicable steps to reduce risks in their business, taking
into account the severity of the ramifications of an incident resulting
from that risk and the likelihood of an incident occurring. This allows
room for a defence, where a business is able to prove that they have
taken “reasonably practicable steps”. The concern for
PCBUs is determining what they “ought reasonably to know”. This
effectively puts the obligation back on a PCBU to attain knowledge of
the risks in their business; ways to do this include:
•
Consultation
with workers;
•
Consultation
with others in their industry;
•
Conducting
risk assessments;
•
Reviewing
previous incidents and accidents;
•
Referring to
Regulations and Codes of Practice; and
•
Considering
any other relevant source of information. PCBUs need to
be proactive in identifying the risks, understanding the impact those
risks could have and then in implementing actions to eliminate or reduce
those risks. It should be noted that the capacity of a PCBU to pay in relation to reducing or eliminating risks is not relevant. |
Franchisors Prosecuted Franchisors have been held criminally liable for
health and safety incidents that have occurred in the workplaces of
their franchisees. Such prosecutions have involved both significant cost
(in terms of fines and legal costs) and loss of corporate reputation.
In 2000 two McDonalds (the fast food chain) companies
were prosecuted after a worker at a McDonalds restaurant in Wollongong
was killed. The worker died after being electrocuted when cleaning a
faulty grill. It was a requirement of the relevant franchise agreement
that the franchisee install and use the grill. The system of work in
place to clean the grill was obviously unsafe. The electrical supply to
the grill could not be terminated unless the equipment was moved
creating the risk of electrocution that ultimately killed the worker. In 2003 Yum! Restaurants Australia Pty Ltd (the
operator of the Pizza Hut franchise in Australia) was prosecuted after a
15 year old worker suffered permanent injuries to her hand after it was
caught in a dough rolling machine. The franchisee was also prosecuted.
Again, the relevant franchise agreement required that the franchisee use
this machine and specified the maintenance that was required. The
machine was known to be faulty and the fault was advised to the
franchisee. However, the franchisor did not follow up to ensure that the
fault was remedied. In 2011 Parker Hannifin, the franchisor of the Hose Doctor franchise, was prosecuted as a result of an explosion in a vehicle being driven by a franchisee. In this case there were health and safety systems in place, however they were inadequate because they failed to keep pace with developments in the industry. |
Discharging of Duties
There are many challenges in business in
general, and franchising in particular around generating work,
developing your brand and system and finding suitable franchisees.
Workplace health and safety potentially adds another drain on finite
resources.
While a franchisor cannot contract away his or her legal obligations,
they can set up a safety management system with which a franchisee must
comply. The information collected via this system will enable a
franchisor to discharge the duties imposed by the Act quite easily and
the franchisor only has to monitor the franchisees compliance with the
system, with the obligation to supply accurate information passed back
to the franchisee.
As a Franchisor, you should ensure that whatever you do, that your
efforts are to make a genuine attempt to create a culture of safety
within your business. You may have an OH&S policy or a Safe Work Method
Statement (SWMS), but if no one in your business knows about them, your
franchisees don’t follow them or you don’t enforce them, it is going to
be hard to convince an inspector or a judge that you are serious about
safety.
More importantly, having a workplace safety system should preserve your
human workforce, save money and reputation.
This can be achieved by contacting Logic Business Resources. We can
provide assistance in:
1. Providing model WHS systems and policies for franchisees to
adopt. A fee may be charged for this under the relevant franchisee
agreement. |
Person
Conducting a Business or Undertaking
Essentially, the new WHS Act now places a primary
duty of care (among other specific duties and obligations), where
reasonably practicable, on any Person Conducting a Business or
Undertaking (PCBU). This is a deliberately broader definition than
“employer – employee” and is designed to take into account modern
working arrangements – contractors and franchisors included. A PCBU owes
this duty to workers engaged or caused to be engaged by the PCBU, or
whose activities are influenced or directed by the PCBU while at work –
or more broadly as “a person who carries out work in any capacity for a
person conducting a business or undertaking”. Specifically,
franchisors will owe this primary duty to franchisees by virtue of the
fact that they:
•
Supply
franchisees with an Operations Manual
•
Supply
franchisees with an OH&S manual
•
Allocate
work to franchisees;
•
Can
contractually require compliance with relevant legislation;
•
Can
contractually require franchisees do not bring the brand into
•
Can impose
sanctions for non-compliance with the contract. On this basis, it can be argued that a franchisor is the PCBU of the franchisee. It should also be noted that a franchisee can be a PCBU in his or her own right also, and will owe primary duties to anyone considered to be their worker. You should also note that you cannot contract out of your duties. |
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