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What could be happening at Grill’d?

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By Chao Ni, Associate, MST Lawyers

A franchisee’s obligation to pay minimum wages to its staff can be found in the national minimum wage order published by the Fair Work Commission (FWC), a modern award or registered workplace agreement.

In the event that a franchisee has in place a registered workplace agreement, its conditions of employment, properly drafted, will displace the terms of a modern award. Even so, the franchisee must ensure that actual wages paid to its staff do not fall below base rates of pay provided for under relevant modern awards (as increased in line with FWC wage increases implemented on 1 July of each year.  Put another way, whilst a registered agreement may not provide for various ‘traditional’ award entitlements (including weekend penalty rates and the like), provided staff covered by the registered workplace agreement are paid no less than the prevailing relevant award base rates of pay, the operation of the agreement is entirely lawful.

The registered workplace agreement entered into by a Victorian based Grill’d franchise (which has developed recent media attention) was drafted and approved under our ‘Workchoices’ era.  The agreement featured clauses and conditions that displaced award conditions (both current and future) that would have otherwise applied to the franchisee’s staff.

The Grill’d employee involved, Ms Kahlani Pyrah, initiated an application to the FWC to terminate the Grill’d franchisee’s registered workplace agreement.  The franchisee’s decision to dismiss Ms Pyrah in such close proximity to her FWC application has raised questions regarding whether her dismissal was in breach of the general protections laws found in the Fair Work Act 2009.  Whether Ms Pyrah was dismissed because she was bullying her managers or whether because she had made her FWC application will be a matter of fact for the Court to determine.

In the meantime, what is undeniable is that the Grill’d brand have been put under the media spotlight.  It may be that the Grill’d franchisee had, at all relevant times, complied with its minimum pay obligations under its registered agreement. 

An important lesson to be learned is that franchisors must take an active interest in the manner in which its franchisees seek to employ their staff, and to ensure that whatever legal framework is being used by its franchisees to regulate the conditions of employment of their staff, the legal framework is compliant and being applied.  Franchisors should look seriously at taking full advantage of the ability for franchisees to adopt a collective registered workplace agreement regime, providing simple and consistent employment terms, permitted under the Fair Work Act 2009.

For further information regarding the topic in this article, please contact our Employment Law and Workplace Safety team by email workplace@mst.com.au or by telephone +613 8540 0200.