Workplace safety legislation and franchisors

Recent changes to workplace safety legislation in most states and territories have led some
franchisors to question whether the legislation affects them given it is their understanding that they do
not directly "employ" persons working in a franchised business. Nothing could be further from the truth.

The wording of the Work Health and Safety Act 2011 (the WHS Act) (applicable in all states and
territories except Victoria and Western Australia1) goes beyond a traditional employer-employee
relationship and captures any business that directs or otherwise controls the manner in which work
may be conducted.

The Act achieves this by imposing duties on "persons with the conduct of the business or
undertaking", commonly referred to as a "PCBU".

The general duty
The WHS Act imposes a duty on PCBUs to ensure the health and safety of individuals (workers or
other persons), so far as reasonably practicable.

The duty cannot be delegated and-where more than one organisation is involved-all organisations
involved will concurrently have that duty and must fulfil it to the extent they have control over the
particular activity, giving rise to a risk or hazard.

In practical terms, this means an organisation with "an undertaking" or business will have a duty to
ensure the health and safety of persons who are affected by its operations-whether as employees,
contractors, subcontractors or members of the public. No more is required than what is "reasonably
practicable" for that organisation to do.

"Reasonably practicable"
What is "reasonably practicable" is determined, objectively, with regard to the particular circumstances
of the business or undertaking and the extent to which that business can control matters giving rise to
the risk or hazard.

Factors taken into account in assessing reasonable practicability include:
- the knowledge of the hazard or risk
- the likelihood of a hazard of risk occurring
- the degree of harm that may result
- whether any controls or mitigation strategies are known, and
- the costs associated with seeking to address any potential hazard or risk.

"Officers" of a PCBU (i.e. directors or individuals who make or participate in decision making that
affects a substantial component of the PCBU) also have an obligation to exercise due diligence to
ensure the PCBU complies with its obligations.
"Due diligence" includes ensuring appropriate resources are available as well as remaining informed,
making enquiries and implementing action as necessary with respect to potential health and safety

#Note that while the wording may slightly differ in the VIC and WA legislation, similar concepts apply.

What this means for franchisors
Courts have made clear that franchisors and franchisees may be PCBUs. The commercial
arrangements between a franchisor and its franchisees do not, in and of themselves, absolve a
franchisor of its WHS obligations.

Franchisors and franchisees are concurrent duty holders and must each do what is reasonably
practicable in their circumstances.

As a minimum, franchisors should:
- ensure appropriate mechanisms are being implemented by franchisees (the extent of the
involvement required by the franchisor will depend on what is reasonably practicable in the
circumstances), and
- consult, co-operate and co-ordinate activities with the franchisee/s when determining how the
franchise arrangements are to operate.

While putting documentation in place, setting out policies, procedures and checklists is a good starting
point, franchisors should also demonstrate the continued use, review and improvement of these
systems as required.

Feel free to contact Carlie directly for more advice.

Carlie Holt | Partner | Workplace
Sparke Helmore Lawyers