What can I do if I have been underpaid and I work for a franchise business?

What can I do if I have been underpaid and I work for a franchise business?

Under the Fair Work Act 2009 (Cth) (‘Fair Work legislation’) all employers need to comply with the minimum requirements set in the National Employment Standards (‘NES’) and any relevant industrial award.

Employers must also pay at least the national minimum wage, which is currently $17.70 per hour.  Most employees are covered by an award, which may set a higher minimum wage and provide other entitlements.

A breach of an award or the NES is a civil breach of the Fair Work legislation and can result in very significant financial penalties for the employer.

If you work for a franchise business, your employer is the franchisee, the company or individuals that operate the business. If you believe you have been underpaid, you have the option of suing the franchisee for breaches of the Fair Work legislation.

Preparing to take legal action against the franchisee for issues such as underpayment will probably require a set of complex calculations and a detailed description of the facts of your employment. Accordingly, you may wish to seek professional legal advice before taking this step.

What if the franchisee is bankrupt or cannot be sued?

Under Section 550 of the Fair Work legislation a person who is involved in or has assisted a breach can be treated in the same way as if they committed the breach.  If the franchise business is bankrupt, there is therefore a possibility that you could directly sue the people who ran the franchise to recover your loss.

It may also be possible to sue the franchisor, the larger business that sells franchises to the people that operate them. The legal principles that allow you to do this in Australia are currently being tested in a class action brought against the franchisor of the 7-Eleven franchise company.

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